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21 June 2022

ZTE and Huawei make hay in Thailand, and other emerging economies 

The arm of US sanctions against ZTE and Huawei has failed to reach far into developing economies of the Far East, Africa and Latin America, many of which remain open to competition from all the major mobile equipment makers.  


Operators in such countries are attracted by pricing and technology differentiators from ZTE and Huawei, but they can also exploit a higher level of competition than in markets where the two Chinese vendors are effectively banned. 


The need for a wide choice of suppliers means that Ericsson, Nokia and Samsung have also been doing well in many developing markets over the past few years. As a result, the global mobile market now falls into three broad zones of competition: 


  • China, dominated even more than before by ZTE and Huawei 
  • North America and most of Europe, where the Nordic duo reign supreme, Chinese suppliers are restricted, Samsung is increasingly getting a look-in, and there is high interest in nascent Open RAN as a way to diversify the supply chain 
  • Much of the Far East, Africa and Latin America, where the whole field plays, including all the major OEMs, and some Open RAN challengers 


There are naturally some exceptions to this geographical pattern, especially when countries are closely politically aligned to either the USA or China. Vietnam, for example, has adopted a stance closer to that of European countries, not actually banning the Chinese vendors but discouraging adoption of their kit, leading to effective exclusion from 5G, and from new 4G networks. This at least partly reflects growing tensions between Vietnam and China over territorial issues, especially in the South China Sea, which has led the country towards the US axis to a greater extent than others in the region. 


Thailand is more typical of the region in embracing all-comers, but especially welcoming participation by Chinese vendors as technology partners. ZTE has just signed a comprehensive cooperation agreement with Thai carrier Advanced Info Service (AIS) to upgrade existing infrastructure to 5G. To stimulate this, the two have launched a 5G Innovation Center as a hub for research collaborations and joint 5G innovations, covering both infrastructure and applications, due for completion by the third quarter of 2022. 


“We are a digital life service provider that focuses on unlocking digital tech such as 5G, a vital piece of infrastructure to enhance the country’s capabilities in the digital economy,” said Somchai Lertsutiwong, CEO of AIS. “This brings us the potential for our investments to deliver a wide variety of experiences and smart services to AIS customers, the Thai public and a range of industrial sectors.” 


This follows the claim, made in March by AIS and ZTE, along with Qualcomm, to have deployed the world’s first 5G NR-DC (dual connectivity) demonstrator in the field at 2.6 GHz and 26 GHz, achieving 8.5Gbps peak downlink speed and 2.17Gbps peak uplink speed with a single mobile device. It was with Huawei, however, that AIS had earlier (in February 2020) launched 5G Non-standalone service over low, mid and high bands spectrum, using the 700 MHz, 2.6 GHz and 26 GHz bandwidth it won in the spectrum auction. Huawei then followed up with a 5G Standalone deployment in July 2020 at AIS. 


Huawei then helped the country deploy a Joint Innovation Lab with Bangkok’s Siriraj Hospital to incubate innovative 5G medical applications, which was celebrated in a launch event with Thai prime minister Prayut Chan-ocha in December 2021, praising the Chinese vendor’s role in the country’s first ‘5G Smart Hospital’.  


So both the major Chinese vendors are deeply involved in Thailand’s 5G roll-out in various guises, with Huawei especially astute at exploiting the Covid-19 pandemic and perceived slowness by western powers to provide help in the form of vaccines and other technologies. Benjamin Zawacki, senior program specialist for Southeast Asian Regional Security at The Asia Foundation in Thailand – and author of the book ‘Thailand: Shifting Ground between US and Rising China – said at the time: “It sends a very strong signal that Thailand is opening the door to Huawei, especially during a public health crisis,” referring to the 5G Smart Hospital. He noted that although China’s two vaccines, Sinovac and Sinopharm, have performed poorly compared with counterparts from Europe and the USA, the Chinese versions were at least made available at greater scale.  


Nonetheless, Thailand has remained open to the other vendors, with Ericsson, in January 2021, announcing that half the country’s 70m population live in areas served by its 5G RAN, as deployed for Thai telco dtac. This was built from the Ericsson Radio System portfolio, including spectrum sharing to expedite flexible transition from 4G to 5G. 


We are seeing similar coexistence between the Chinese and western suppliers in many other developing countries, with Indonesia deepening ties with Huawei from December 2021, attracted in part by the vendor’s perceived lead in energy efficiency to help accelerate a drive towards net zero in the mobile sector. At the same time though Ericsson announced in March 2022 that it was helping Indosat Ooredoo Hutchison (IOH) expand its 5G footprint to the Jabotabek area on the outskirts of Jakarta. 


Much of Latin America has also provided rich pickings for all the main vendors, with Huawei seeking to consolidate its position by investing widely in cloud-attached data centers to underpin mobile networks and help enterprises employ 5G-based edge compute. This has led to some tangible coups such as Huawei’s collaboration with TIM Brasil to develop a ‘5G City’ initiative in the country, announced during Mobile World Congress 2022. The first pilot city is the capital of Parana state, with first tests set to be completed by December 2023. This will use a Massive MIMO platform that Huawei is helping develop for the 5G City project, to achieve twin goals of high 5G transmission speed and ultra-low latency, according to the vendor. 


At the same time, both Nokia and Ericsson have been thriving in Latin America, in each case enjoying faster revenue growth in the region than their global average. Nokia, for example, announced in February that Latin America had been its best-performing region for sales growth in 2021, with a rise of 15% year-on-year, or 17% in constant currency terms, to €1.23 bn ($1.3 bn), or 20% of the company’s global total.  


Samsung is an interesting case, having benefited from the exclusion of Huawei and ZTE from many markets and associated fears of narrow supply chains and over-dependence on the Nordic duo. Samsung harnessed its industrial and financial muscle as a major conglomerate to accelerate its 5G infrastructure business, concentrating initially on more affluent markets such as the USA, Japan, UK and South Korea itself, aiming to exploit their high LTE and 5G adoption rates.  


Now, however, Samsung is increasingly pursuing emerging markets, including Africa, where the Chinese vendors are particularly strong, but where upgrade to 5G has yet to commence at any significant level in most markets. Huawei alone has built about 70% of the continent’s 4G networks but Samsung believes it can compete strongly for forthcoming 5G deployments there.