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8 June 2021

Huawei scores in Malaysia and possibly India, but not in the USA

As so often happens, Huawei had some good news on the 5G front, immediately followed by further restrictions imposed by the USA.

First, it seems that Vodafone Italy will choose the Chinese vendor for some of its 5G roll-out (see previous item), and in Malaysia, a former deputy minister of international trade and industry, Kian Ming Ong, told reporters there is no evidence of security vulnerabilities in Huawei’s 5G equipment. He added that the government was likely to select Huawei as a prime supplier for the national wholesale-only 5G network that is being planned as a shared resource for all the MNOs and potentially other service providers.

Meanwhile, India’s third operator, Vodafone Idea, is reported to have signed an equipment deal worth about $54.7m deal with Huawei, just before new government restrictions on the vendor came into effect. In March, the government tightened procurement rules for operators and ISPs and said they must only buy “trusted products” from June 15. After this, they must seek special permission to use equipment that is “not designated as trusted sources”.

This was widely assumed to be a non-explicit way of excluding Huawei and ZTE from upcoming 5G networks, despite opposition from Bharti Airtel, Vodafone Idea and BSNL, all of which have worked with Huawei in the past and are keen, in a budget-conscious nation, to keep their supplier options as wide as possible. Huawei and ZTE were both recently left off the government’s list of approved vendors to take part in Indian 5G trials later this year, having initially been included on a preliminary list.

It seems that Vodafone Idea may have leapt in to avoid the new restrictions, with sources saying it has awarded an add-on contract to upgrade hardware and software in the 4G network. However, Vodafone is also reported to owe Huawei about $100m for existing contracts, so that the vendor is only delivering limited equipment while it waits for payment.

Vodafone Idea is Huawei’s largest Indian customer, using its 4G equipment in seven telecoms operating circles, though it also uses ZTE and Nokia gear. Reliance Jio works with Samsung for its 4G macro network and Airspan for small cells while Bharti Airtel has been defocusing on Huawei and awarded large contracts to Nokia and Ericsson last year.

But Chinese hopes that a change of government in the USA might lead to relaxation of sanctions against Huawei, and wider trade and security tensions between the two countries, have been dashed so far, even if the tone of the debate is more measured. Last week, president Joe Biden has expanded the list of Chinese companies that are deemed to have links to their country’s military, and so constitute potential security threats. Last November, former president Donald Trump signed an executive order banning Americans from investing in the companies and he announced a list of 31 blacklisted firms including Huawei and China’s three telecoms operators.

The list was then expanded to 48 despite some legal challenges, and has now been increased again, to 59. Biden’s new list was compiled by the US Treasury, rather than the Defense Department. The main addition of relevance to 5G is SMIC, China’s largest chip foundry.

A few companies have been successful in getting themselves removed from the list following legal challenges, including handset maker Xiaomi.

The new government says the revised list, and some new rules, are an effort to make policy clearer and less open to challenge, and warned that new names may be placed on it as further assessments are made in the months ahead. “We really want to make sure that any future prohibitions are on legally solid ground. So, our first listings really reflect that,” said a senior administration official.