With EU governments increasingly concerned about Huawei, telecoms including UK's BT, France's Orange, and Deutsche Telekom are reconsidering the use of its gear
on which it is on course to spend hefty $16bn, or 15 per cent of sales, this year, according to Vincent Peng, president of Huawei in western Europe.” Elliott Zaagman / @elliottzaagman : Meanwhile, in earlier in the year, Huawei let go of their long-time External Affairs VP William Plummer. In August, he published a 351-page tell-all about his time at the company: “Huidu-Inside Huawei.” (7/n) https://www.amazon.com/... Ashley Simmons / @ashleysimmonsdc : #Telecom equipment supplier Huawei is hemorrhaging allies in Europe on growing security concerns. One thing is certain, reputational damage will be significant whatever the outcome. https://www.bloomberg.com/... Simon Mikhailovich / @s_mikhailovich : Rising geopolitical competition b/w China and the US is driving de-globalization of the high tech industry. http://www.bloomberg.com/...
Context & Ripple Effects
Huawei spent years buying its way into European networks during the 4G upgrade cycle, an expansion that unraveled over security concerns once the US and UK began sounding alarms. This report is the moment the concern reaches carrier boardrooms: BT, Orange, and Deutsche Telekom are all re-evaluating gear from a supplier on course to spend $16bn in western Europe this year, per Huawei's own regional president Vincent Peng.
The reputational slide is visible inside the company too — long-time External Affairs VP William Plummer was let go and published a 351-page tell-all about his time there. What follows is the arc the related coverage traces: carriers retreat, Huawei eventually scales back in the UK, France, and Belgium, and Beijing answers in kind.
First-order effects
- BT, Orange, and Deutsche Telekom face immediate network-planning and procurement costs as they weigh replacing or excluding Huawei equipment already embedded in their infrastructure.
- Huawei's western Europe revenue — the $16bn, 15%-of-sales operation Peng described — comes under direct threat as its largest overseas customer base signals it may walk away.
Second-order effects
- Nokia and Ericsson become the default beneficiaries of any European exclusion, gaining pricing power over carriers who suddenly have fewer qualified vendors to bid their upgrades.
- Exclusion cuts both ways: as later reporting shows, China retaliated by curbing Nokia and Ericsson in its own networks, so European carriers' vendors now face losing the Chinese market their rival is being pushed out of.
Third-order effects
- Telecom equipment supply splits into geopolitical blocs, with national security reviews — not price or performance — deciding which vendors carriers can buy, a structure Huawei adapted to by diversifying into new businesses and leaning on Beijing support.
- If the pattern holds, carrier procurement becomes an instrument of state policy on both sides, entrenching a two-stack world in which Chinese and Western networks run on mutually excluded suppliers.
The trend: Global telecom infrastructure is de-globalizing along US-China lines, with government security concerns overriding the cost advantages that carried Huawei through the 4G cycle.