European United Group considers dropping Huawei Kits, as India orders telcos to use “trusted products”

European United Group considers dropping Huawei Kits, as India orders telcos to use “trusted products”

India’s Department of Telecommunications (DoT) ordered local telcos on Thursday to use “trusted products” and telecom kits for their networks as of June 15, 2021, subtly hinting at dropping Huawei gear.

The DoT told operators in a communication that it has amended the Unified Access Services License Agreement by adding a layer of security telcos need to abide by.

“With effect from June 15, 2021, the licensee (telecom operators) shall only connect Trusted Products in its network and also seek permission from designated authority for upgradation of network utilizing the telecommunication equipment not designated as Trusted Products,” DoT said in the communique.

The department, however, highlighted that the new directions given will not affect any ongoing annual maintenance contracts (AMC) or updates to existing equipment already inducted in the network as on date of effect.

The move would draw cause for concern by India’s leading operator – Bharti Airtel, Vodafone Idea, and Reliance Jio – since it would curb their ability to sell 5G and 4G networks in the future.

According to the newly added clause, the Indian government will have the ability to force conditions for procurement of telecommunication equipment on grounds of defense of India, or matters directly or indirectly related thereto, for national security. The DoT mentioned that the National Cyber Security Coordinator would be the designated authority to impose conditions if any may rise.

The communique further explained that the designated authority shall notify the categories of equipment for which the security requirement related to trusted sources are applicable. Designated Authority shall notify the trusted sources along with the associated Telecommunication Equipment (Trusted Products).

“The designated authority may notify a list of designated sources from whom procurement may not be done. Procurement for inclusion of telecommunication equipment in the list of trusted sources will be issued by the Designated Authority,” the DoT communication added.

Security concerns over 5G kits and equipment from Chinese tech titans Huawei and ZTE were raised by the former Donald Trump administration as part of the U.S.’ trade spat with China.

The concerns include matters of espionage, sabotage, and blackmail, with countries such as India, the UK, and Taiwan considering Huawei as persona non grata from their respective fifth generation network rollout and deployment efforts; Huawei has denied all allegations of its ties to China’s Communist government.

In parallel, Balkan telecoms and media company United Group is considering dropping the Chinese vendor’s equipment in parts of or all its network, since it dominates the company’s infrastructure and switching to alternative providers, as it seeks to align itself with the U.S. government, Reuters reported on Wednesday.

United, owned by private equity firm BC Partners, operates in several countries such as Bulgaria, Croatia, Slovenia, Greece, and Serbia providing a range of services, including mobile, cable TV, broadband Internet, and fixed telephony.

Several operators in the eastern and south-eastern Europe had traditionally used Huawei kits to construct their networks as they were cheaper than those of rivals Nokia and Ericsson. “I think a gradual and measured switch to something that is more U.S.-approved is the right approach, and it’s one that we’re considering,” United Chairman Nikos Stathopoulos told Reuters.

However, such large-scale equipment swaps are time consuming and financially costly.

“We cannot ignore their wishes but, in an ideal world, we should also receive financial help [from governments] for switching to new infrastructure, as it will cost us millions of dollars to do so,” Stathopoulos, who is also a partner at BC Partners, further added to Reuters.

Back in early February, the company’s founder told the media that he doubts President Joe Biden will remove U.S. sanctions that battered the telecom equipment giant’s smartphone sales.

Speaking in the central city of Taiyuan, Ren Zhengfei said strong sales of network gear and other technology should make up for Huawei’s weaker handset business, according to a transcript released by the company.

“We can still survive even without relying on phone sales,” he was quoted as telling reporters.

Then-President Donald Trump cut off Huawei’s access to U.S. processor chips and other technologies needed to make smartphones in 2019. Last year, Trump tightened those curbs by prohibiting suppliers from using U.S. technology to make chips for Huawei designed by its own engineers.

Ren said he expects Biden to consider U.S. chip makers and other suppliers that are losing billions of dollars in sales to Huawei. But he said it is “very unlikely” Huawei will be removed from the “Entity List.”

“I won’t say it’s impossible, but it’s extremely unlikely. We basically aren’t considering it a possibility,” Ren said.

However, it is worth mentioning that while Ren highlighted his company’s significant hit in terms of smartphone sales, Huawei has continued to lead on more than one front. 

According to Amesterdam-based games and esports data company Newzoo, Huawei has overtaken South Korean Samsung as the top manufacturer of 5G-ready smartphones.

“Huawei had an incredible 2020 in terms of its 5G-ready-smartphone sales. Owing to the success of devices such as the P40 series, the company became the 5G-ready market leader at the end of 2020. Huawei’s share of active 5G-ready devices skyrocketed from 8.6 percent in November to 27.0 percent in December,” Newzoo reported.

Huawei’s home market, China, remains the leader in 5G device adoption; therefore, it’s no surprise that the company is also leading the market for 5G-ready smartphones. 

“But Huawei’s future position remains uncertain, owing to the U.S sanctions and the fact that it sold the Honor brand (reportedly due to said sanctions). Soon after this sale, Honor began working with Qualcomm and MediaTek on 5G chips. Nevertheless, Huawei’s impressive market share as of December 2020 is undeniable,” Newzoo highlighted.

In parallel, a recent report by U.S.-based telecom insights company Dell’Oro Group revealed that the Chinese vendor has increased its market share as the top telecoms equipment vendor worldwide, mainly due to strong demand within mainland China through all of 2020.

Huawei’ share by revenue rose by 28 percent to 31 percent, ahead of Finnish Nokia’s 15 percent, Swedish Ericsson’s 15 percent, and Chinese ZTE’s 10 percent; while U.S. Cisco 6 percent, Ciena’s 3 percent, and South Korean Samsung’s 2 percent made up the rest of the top seven.