Vodafone (VOD) will remove Huawei from its core network across the European Union (EU), at a cost of about €200m (£169m) over the next five years. This news comes after the UK government unveiled its hotly-anticipated decision on the Chinese company – opting to exclude high-risk vendors from the sensitive ‘core’ parts of the 5G network, and from sensitive geographical locations – while also setting a 35 per cent cap on access to non-sensitive parts of the network.
The telecoms giant’s chief executive Nick Read said that Vodafone was already in compliance with these measures in the UK and has limited financial exposure. It is now replacing Huawei in the areas deemed sensitive across Europe. But “in the non-sensitive radio access network [RAN], Huawei are an important supplier to both Vodafone and the overall industry, reflecting their high-quality technology”. He said that RAN quotas which require Vodafone to swap out its modern 4G networks could lift prices and delay the roll-out of 5G by two to five years. Given that this could hold back Europe’s digital competitiveness, Mr Read says that the better option is “to allow the industry itself to improve supply chain diversity”.
These revelations came alongside Vodafone’s third-quarter results. The group reported organic service growth of 0.8 per cent to €9.7bn. In Europe, a continued recovery in Spain and acceleration in the UK was tempered by a more difficult prior-year comparison in Italy. In Germany, retail revenues improved thanks to good cable broadband net additions. In the ‘rest of the world’ region, growth of 9.1 per cent to €2.1bn reflected an ongoing recovery in South Africa, offset by lower growth in Turkey.
Vodafone said that it was making progress on bringing its European tower company into operation by May of this year. It reiterated full-year guidance for adjusted cash profits of €14.8bn-15bn and pre-spectrum free-cash-flow of €5.4bn.
