Huawei building


Vodafonewatch
This release
: #172
February 2019: 66pp
Releases/year: 10+
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Executive brief

Management update

Q3 FY18-19: More fighting talk from Read as slump continues [p.6]

  • New CEO Read's reshuffle still in train
  • Headlines -- too many passengers
  • Table: Vodafone Group revenue summary, Q3 FY18-19
  • Consistency continues to elude
  • Table: Vodafone Europe Region revenue summary, Q3 FY18-19
  • 'AMAP' becomes 'Rest of World'
  • Table: Vodafone Rest of the World Region service revenue summary, Q3 FY18-19
  • Vodafone increasingly becoming 'Europe plus Vodacom, etc'

Group

Deals: Vodafone opts against regional tower spin-out [p.14]

  • 5G network rethink taking precedent
  • Med match-ups
  • Table: Vodafone Europe Region tower assets

Legal and Regulatory: Vodafone hands auditing reins to EY [p.17]

  • Phones 4u shadow
  • Crying foul

Network: IBM tie-up to include Vodafone Cloud reboot [p.19]

  • Table: Vodafone IoT Partner Network by speciality, February 2019

People [p.22]

  • Table: people movements

Supply Chain: Vodafone changes tack in Huawei security storm [p.25]

  • Let's talk
  • UK pressure mounts but German mood music softens; Ireland and Italy hold firm

Suppliers [p.30]

  • Table: Partner/supplier people movement highlights

Europe Region

Germany: VfD ups pressure on BNetzA to change 5G course [p.33]

  • What's all the fuss about?
  • Dommermuth makes his move

Casa Systems highlights DOCSIS 3.1 role [p.36]

UK: Group's hands-dirty savings drive expands to UK [p.39]

Rest of the World Region

Australia: VHA merger with TPG under renewed scrutiny [p.42]

  • Urge to merge
  • Watchdog on guard

Egypt: Telecom Egypt digs in over Vodafone ties [p.45]

Ghana: Vodafone Ghana bats off local float talk [p.47]

India - Vodafone Idea: VfI trumpets early progress in network meld [p.48]

  • Vodafone Idea makes push on NB-IoT smart-metering
  • Other NB-IoT irons in the fire
  • Vodafone Idea to launch new music app
  • Fostering partnerships to drive value

Vodacom Group: Vodacom remains on hold for SA's 4G auction [p.54]

  • Read happy with WOAN dilution
  • Airtel and Telkom to merge to create a stronger challenger to Safaricom

Further reading

Index

A

Accenture 21

Acciona

 - ENDESA 37

Aditya Birla Group

 - Idea Cellular 49, 52

Africa 9, 11, 12, 22, 23, 30, 57, 61

 - Egypt 11, 45, 46, 61

 - Ghana 47, 61

 - Kenya 23, 56, 57, 61

   --  Government 56

 - North Africa 23, 24

 - South Africa 11, 24, 51, 54, 55, 57, 58

 - Sub-Sahara 57

Alfa Group

 - Altimo (Alfa Telecom International Mobile)

 - Turkcell (see Curkurova/TeliaSonera/separate) 35

Altice Group 37

Altran Technologies, SA 30

Amazon.com Inc. 53

Americas

 - USA 29, 35, 37

 - States

  --  Washington 29

Apple 52

Asia Mobility Initiative (AMI Alliance) 50

Asia-Pacific 52

 - Australia 12, 24, 29, 30, 42, 43, 44, 51, 61

 - China 25, 26, 27, 28, 29, 30, 43

 - India 12, 24, 48, 50, 51, 52, 56, 61

  --  Licence Circles

   ---   Andhra Pradesh 48

   ---   Assam 48

   ---   Chennai 51

   ---   Delhi 49

   ---   Haryana 48

   ---   Himachal Pradesh 48

   ---   Jammu & Kashmir 48

   ---   Kolkata 48, 49

   ---   Madhya Pradesh 48

   ---   Mumbai 48, 49

   ---   North East 48

   ---   Rajasthan 50

   ---   West Bengal & Andaman and Nicobar 48

 - New Zealand 12, 24, 30, 59

 - Singapore 37

 - Taiwan 37

Australian Competition and Consumer Commission (ACCC) 42, 44, 61

Avanti Communications Group plc 24

Axiata Group Bhd (TM International)

 - India (Idea Cellular, see also Aditya Birla) 12, 24, 46, 48, 49, 50, 52, 53, 61

B

Bain & Co. 24

Banco Santander, SA 24

Bharti Group 52, 56

 - Airtel 52, 56, 61

 - Africa

  --  Kenya 56, 61

 - Bharti Enterprises

 - Comviva Technologies (Bharti Telesoft) 24

British American Tobacco 23

BT Group 24, 26, 27, 28, 37

Bundesliga 37

C

Capitec Bank Holdings Ltd 57

CarePay 57

CGI Group Inc. 21

Ciena Corp. 30

Coca-Cola 23

Commercial Bank of Africa 57

Cukurova Holding

 - Turkcell (see Altimo/TeliaSonera/separate) 35

D

Dell 21, 22, 24

Dell Technologies 21, 22, 24

 - Dell EMC 21, 22

Deloitte Touche Tohmatsu 17, 18

Deutsche Telekom 9, 28, 34, 40

 - Europe

  --  UK (EE) 18, 28

Device Insight 21

DIEHL Metering 21

Drillisch AG 35, 60

E

EE (see DT, FT) 18, 28

Electricity Supply Board (Ireland) 29

EMC 21, 22

Ericsson 22, 23, 26, 30, 38, 40, 49

Ernst & Young 17

Europe 7, 8, 9, 12, 15, 16, 22, 23, 25, 26, 28, 30, 32, 34, 40, 60

 - Central Europe 22

 - Czech Republic 22, 51

 - Finland 28, 34

 - France 22, 30, 57

 - Germany 8, 9, 10, 16, 22, 25, 28, 33, 34, 35, 38, 40, 51, 59, 60

  --  Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen (BNetzA, RegTP, FNA, or German Federal Network Agency) 33, 34, 60

   ---   Government 28

   ---   Länder

  --  Bavaria (Munich) 36

  --  North Rhine-Westphalia (Düsseldorf) 40

 - Greece 10, 16, 51

 - Hungary 22

 - Ireland 10, 16, 23, 28, 37, 51

 - Italy 6, 8, 10, 15, 16, 23, 24, 25, 28, 29, 37, 51, 59

  --  Government 29

 - Luxembourg 37

 - Netherlands 16, 35, 51

 - Poland 37

 - Portugal 10, 16, 37, 38, 60

 - Romania 10, 22, 23

 - Russia 22

 - Scotland 20

 - Spain 6, 7, 8, 10, 15, 16, 23, 24, 28, 38, 51, 60

 - Sweden 22, 23

 - Turkey 9, 11, 12, 16, 22, 28, 38, 51

 - Ukraine 22

 - UK 7, 10, 15, 16, 18, 20, 22, 23, 25, 27, 28, 29, 30, 37, 38, 39, 40, 59, 60

  --  Ofcom 40

European Union

European Commission 22

F

F5 Networks Inc. 30

Flint Group

 - Mobius 21

Ford Motor Company 22

Formula One 37

G

Google 52

Google Play 52

Grant Thornton UK LLP 21

GSM Association (GSMA) 27, 38, 40, 59

 - Mobile World Congress 27

H

Helios Investment Partners 56

Hisense Electric Co., Ltd. 21

Huawei Technologies 25, 26, 27, 28, 29, 30, 34, 37, 40, 42, 43, 49, 59, 61

Hungama Digital Media Entertainment Pvt. Ltd 52

Hutchison Whampoa

 - Vodafone Hutchison Australia Pty Ltd (VHA, (see Vodafone) 12, 24, 30, 42, 43, 44, 61

I

IBM 19, 24

iDefigo 21

Iliad 10

Ingenico S.A. 21

Inseego 21

J

Jones Lang LaSalle Inc. 38

K

Kenya Commercial Bank 57

KPMG International 18

KPN 35

L

Liberty Global 22, 35

 - UPC Germany GmbH

 - Unitymedia GmbH 36, 37

 - Virgin Media 37

LinkedIn Corp. 22

M

Mahindra Group

 - Tech Mahindra 21

Market segments

 - Fixed broadband 44

 - Mobile virtual network (MVNA/MVNE/MVNO) 35

 - Network-sharing 15

 - Over-the-top (OTT) 35, 53

 - Value-added services (VAS) 24, 45

 - Voice 35, 38, 49

McKinsey & Co 6

Microsoft 20, 23, 24

Middle East 22, 24, 61

 - Egypt 11, 24, 45, 46, 61

 - Qatar 12

MTN 47

 - Ghana (Scancom) 47

N

Nationwide Building Society 24

Nedbank Group Ltd (Nedcor) 57

Netflix Inc. 53

NFL Enterprises LLC 37

Nokia 26, 28, 29, 30, 34, 49, 59

Numerex Corp. 21

NXT 53

O

Ooredoo 35

Orange

 - Kenya (Telkom Kenya, see separate) 56, 61

 - Orange 15

 - Spain 15

 - UK (see EE) 18, 28

P

Pearson plc 24

PepsiCo Inc. 22, 23

Phones4U 17, 18, 59

PwC 17, 18, 59

Q

Qualcomm 21, 40

S

Safaricom 23, 46, 56, 57, 61

 - M-PESA 57

Samsung 26

Siemens 35

SoftBank Corp. 24

Sony Corp. 24

 - Sony Pictures Entertainment Inc. 24

Spotify Ltd 52

Standard Bank 57

T

Tech Data 21

Technology

 - 2G 55

  --  GSM 27, 38, 40

 - 3G 34, 55

  --  Evolved HSPA (HSPA+/I-HSPA)

  --  MIMO 48

 - 4G 30, 34, 40, 46, 48, 51, 54, 55, 60, 61

  --  Long Term Evolution (LTE) 38, 40

  --  VoLTE (Voice-over-LTE) 38

 - 5G 9, 10, 15, 25, 26, 27, 28, 29, 30, 33, 34, 35, 40, 43, 55, 59, 60

 - AI 20

 - Cloud computing 19, 22, 38

 - Data centre 19

 - Fibre 15, 22, 23, 29

 - IoT 20, 21, 50, 51, 61

 - IP 38

 - Narrow Band Internet of Things (NB-IoT) 21, 50, 51

 - RAN 25, 26, 27, 28, 30, 48

 - R&D 26, 28, 50

 - Smartphone 40

 - SMS 40

 - Spectrum 34, 35, 38, 43, 48, 54, 55, 60, 61

  --  700 MHz 43, 55

  --  800 MHz 40, 47, 54

  --  900 MHz 55

  --  1800 MHz 38, 55

  --  2100 MHz 55

  --  2600 MHz 54

  --  3500 MHz 55

 - Telematics 21

  - VDSL 9

 - W-LAN 38

Tele Columbus 35

Telecom Egypt 45, 61

Telecom Italia 15

Telefónica Group 9, 15, 18, 33, 34, 60

 - Europe

  --  UK 15, 18

TeliaSonera

 - Turkcell (see Alfa/Curkurova/separate) 35

Telit 21

Telkom Kenya Ltd (Orange Kenya) 56, 61

Telstra

 - Hong Kong CSL Limited 21

Texas Pacific Group (TPG) 30, 42, 43, 44, 61

Turkcell (see Alfa/Curkurova/TeliaSonera) 35

U

u-blox 21

UEFA 37

 - Champions League 37

Unilever 22

United Internet 9, 33, 35, 60

 - 1&1 Internet 9

V

Vodacom Group 7, 9, 11, 12, 23, 24, 46, 47, 54, 55, 56, 57, 58, 61

 - Group 7, 9, 11, 12, 23, 46, 47, 54, 56, 57, 58, 61

 - Lesotho 57

 - Products

  --  Please Call Me 58

 - South Africa 11, 24, 51, 54, 55, 57, 58

 - Tanzania 24, 47

 - Vodacom Business 23

Vodafone

 - Africa, Middle East, and Asia Pacific Region (AMAP) 7, 9, 11, 12

  --  Africa 9, 11, 12, 22, 23, 30, 57, 61

  --  Asia 52

  --  Australia 12, 29, 30, 42, 43, 44, 51, 61

   ---   VHA Pty. Ltd (see Hutchison Whampoa) 30, 42, 43, 44

  --  Egypt 11, 12, 24, 45, 46, 61

  --  Ghana 12, 47, 61

  --  India 12, 24, 48, 50, 51, 52, 56, 61

  --  Japan 24

  --  Kenya (see Safaricom) 23, 46, 56, 57, 61

  --  Middle East 22, 24

  --  New Zealand 12, 24, 30, 37, 59

   ---   TelstraClear 37

  --  Qatar (see Vodafone and Qatar Foundation and Vodafone Qatar) 12, 46

  --  South Africa (see Vodacom) 7, 9, 11, 12, 23, 24, 46, 47, 51, 54, 55, 56, 57, 58, 61

  --  Turkey 7, 9, 11, 12, 16, 22, 28, 38, 51

    ---   Board of Directors

    ---   Nish, David 17

  --  Europe Region 7, 8, 9, 12, 32, 60

  --  Czech Republic 22, 51

  --  Germany 7, 8, 9, 10, 16, 22, 24, 25, 28, 33, 34, 35, 36, 37, 38, 40, 51, 59, 60

   ---   KDG Holding GmbH (Kabel Deutschland) 36

  --  Greece 10, 16, 51

   ---  Zelitron 21

  --  Hungary 22

  --  Ireland 10, 16, 23, 28, 29, 37, 40, 51

   ---   SIRO 29, 59

  --  Italy 6, 7, 8, 9, 10, 15, 16, 23, 24, 25, 28, 29, 37, 51, 59

  --  Netherlands 16, 35, 38, 51

   ---   VodafoneZiggo 16, 37, 38

  --  Portugal 10, 16, 37, 38, 60

  --  Romania 10, 22, 23

  --  Spain 7, 8, 9, 10, 15, 16, 22, 23, 24, 28, 37, 38, 51, 60

   ---   Grupo Corporativo Ono (ONO) 23, 37

  --  UK 7, 8, 9, 10, 15, 16, 18, 20, 22, 23, 24, 25, 27, 28, 29, 30, 37, 38, 39, 40, 59, 60

   ---   Cornerstone Telecommunications Infrastructure Ltd 15, 16

  -  Executives

   --  Badrinath, Vivek 7, 22

  --  Bisio, Aldo 29

  --  Coimbra, António 23

  --  Colao, Vittorio 6, 7, 10, 12

  --  Della Valle, Margherita 6, 39

  --  Gliddon, Nick 51

  --  Heeran, Fran 38

  --  Hitchcock, Albert 24

  --  Humphries, Brian 22

  --  Joosub, Shameel 7, 54, 57

  --  Lorilloux, Murielle 23

  --  Mensah, Gayheart 47

  --  Parbutt, Nick 22

  --  Paris, Jason 30

  --  Read, Nick 6, 7, 14, 19, 25, 39, 55

  --  Roman, Francisco 23

  --  Schellekens, Ronald 22, 23

  --  Sharma, Balesh 52

  --  Stanica, Gabriela 23

  --  Teggart, Sean 23

  --  Timuray, Serpil 7, 16

  --  Vishant, Vora 49

 - Ex-executives

  --  Humm, Philipp 12

 - Group 9, 22, 24, 30, 38, 59

 - Headquarters 30, 39, 40

 - Partner Markets 20, 21

  --  Belgium (Proximus) 37

  --  Kenya (Safaricom) 23, 46, 56, 57, 61

  -- Vodafone Global Enterprise (VGE) 22

  -- Vodafone Procurement Company (VPC) 14

  -- Vodafone Ventures

   --- Device Insight (see separate) 21

 - Products

   ---   At Home 36, 37, 60

   ---   Business 19, 22

   ---   Casa 36, 37, 60

   ---   Europe 10, 16

   ---   GigaTV 35

   ---   Liberty (Malta) 22, 35

   ---   Mobile Broadband 26, 40

   ---   Please Call Me 58

   ---   Vodafone Cloud 19

Vodafone Qatar Q.S.C. 46

Volkswagen 35

W

Wipro 24

Z

ZTE Corp. 29, 30, 59

  • Read declares “pause” on installing Huawei core equipment in European 5G networks…
  • … but CEO criticises current security debate as being too “simplistic”.
  • Anti-Huawei political noises rattle in Italy and UK, but soften in Germany.

Nick Read, Chief Executive (CEO) of Vodafone, put on “pause” the installation of Huawei Technologies’ core 5G equipment in Europe.

There was no suggestion from the Group’s top brass that it sees the Chinese supplier as posing a genuine risk to national security, but, by pressing the ‘hold‘ button in this way, Read seemed keen on placating what he sees as over-anxious politicians bent on banning Huawei kit altogether. According to the Financial Times, Vodafone will hold more talks with governments and security services to “get the facts on the table”.

Fact-finding was a theme of Read’s comments regarding the Huawei situation during Vodafone’s earnings conference call for the quarter to 31 December 2018 (Q3 FY18-19), held in late-January 2019. He appealed for a “fact-based conversation” about Huawei’s security, and referred to the current geopolitical debate as having become too “simplistic”.

In Read’s view, the core and radio access network (RAN) equipment scenes have become worryingly conflated. Any security investigation, indicated the CEO, should focus on the core where there is greater scope for cyber shenanigans. If Huawei’s RAN equipment was also disallowed  akin, perhaps, to throwing the baby out with the bathwater  Read warned that many operators across Europe will suffer. These comments come despite industry talk of adding greater intelligence and programmability into RAN equipment, to support 5G, however.

“If there was a complete [Huawei] ban at the radio level, then it would be a huge issue for us, but it would be a huge issue for the whole European telco sector… Huawei has probably… 35% [RAN] market share through the whole of Europe. ” – Read.

Read has repeatedly expressed concern about the recent escalation of anti-Chinese supplier sentiment. In late-2018 comments sure to have been welcomed by Huawei, Read first responded to growing anti-Chinese supplier noises by stressing Huawei was “actively engaged” with British and European cybersecurity agencies (Vodafonewatch, #170). “I think they’re doing everything possible to ensure they remain a very serious and credible supplier”, he added.

The CEO is no doubt conscious that Vodafone has a lot of skin in the game when it comes to Huawei. As well as RAN ties, Vodafone is also close to Huawei in other IT and infrastructure realms, plus research and development (R&D). Another Vodafone concern will be that relying entirely on the likes of Ericsson, Nokia, and Samsung will reduce diversity of 5G infrastructure choices – at least in the near term. Speaking at November 2018’s Global Mobile Broadband Forum, a Huawei-hosted event in London, BT Group Chief Architect Neil McRae tellingly asserted that “there is only one true 5G supplier right now and that is Huawei – the others need to catch up”.

Let’s talk

Read’s favoured approach is more time for engagement between politicians, security agencies, and Huawei in order to “improve everyone’s understanding” about the steps the Chinese supplier is undertaking “in terms of engineering processes”. Unlike UK incumbent BT Group, Vodafone seems unwilling to replace the Chinese supplier’s core equipment without deeper investigation. Read called for authorities to perform more analysis and cross-checking, and not to do anything hasty (and expensive, for Vodafone).

Read tried to reassure investors and analysts on the Q3 conference call that any disruption from placing Huawei on a core network holding pattern will be minimal. He asserted that Vodafone will continue using Huawei in the RAN. “[Huawei is] not significant in the scale of our operations in the core and, therefore, it’s not a big financial implication”, maintained the CEO.

If push comes to shove, and political pressure proves too great to withstand on extricating Huawei equipment from the core, Read insisted that the financial consequences would not be that great for the Group. The resultant challenge would be around “execution complexity”. Read estimated the replacement of Huawei kit would take two years to complete – BT’s timeframe – though it is hard to imagine a process of this sort not taking some financial toll.

Huawei seemed happy with Read’s non-judgmental approach. “Huawei is focused on supporting Vodafone’s 5G network rollouts, of which the core is a small proportion”, said the Chinese supplier in a statement quoted by the Financial Times. “We are grateful to Vodafone for its support of Huawei and we will endeavour to live up to the trust placed in us”, it added.

In early-February 2019, Reuters reported that trade body the GSM Association (GSMA) was considering official internal discussions about Huawei security. Mats Granryd, Director General of the GSMA, apparently wrote to the association’s members about putting the Chinese supplier on the agenda of its next board meeting, scheduled to take place at Mobile World Congress in Barcelona in late-February 2019. Vodafonewatch was unable to determine if Huawei was firmed up as an agenda item at the time of going to press.

UK pressure mounts but German mood music softens; Ireland and Italy hold firm

At a national level, there remained a varied mix of signals regarding the Huawei situation and its likely impact on Group OpCos.

German Chancellor Angela Merkel gave Vodafone Germany (VfD) and rivals some hope they will not be forced to abandon Huawei gear. According to Handelsblatt, the German government wants to avoid blocking the Chinese supplier’s 5G kit, provided Huawei can give guarantees it will not pass on data to the Chinese state. This is a welcome turnaround for VfD. An earlier Reuters report had indicated that some “senior Germany officials” were lobbying the government to prevent Chinese suppliers from building 5G infrastructure, ahead of the country’s 5G auction (see separate report). However, Handelsbatt further reported that VfD is removing some Huawei components from its core network and replacing them with Nokia equipment, in a project expected to take around one year. The report emerged only days after Read announced that Vodafone was putting Huawei’s core equipment on hold. However, a VfD spokesperson insisted that Huawei’s ejection was not related to the current security debate, but rather stemmed from a contract gained by the Finnish supplier “almost two years ago”. Some Huawei components will apparently still be used in the OpCo’s core network, but not in the most sensitive areas. In keeping with Read’s more relaxed approach towards non-core equipment, Huawei remains a major player in VfD’s RAN.

VfD is not fighting a lone battle against knee-jerk reactions towards Chinese suppliers. Incumbent Deutsche Telekom recently proposed a series of measures aimed at tightening up future 5G networks (Deutsche Telekomwatch, #80). Although initially aimed at national authorities, the proposals look broad enough to apply elsewhere in Europe. One proposal is that all critical infrastructure should be independently certified before deployment. An independent laboratory, under state oversight, should be tasked with inspecting equipment. Another Telekom suggestion was for kit suppliers to submit equipment source code to a “trusted third party”. Under this arrangement, and in certain circumstances, operators will gain source code access to address any security vulnerabilities. An idea to broaden legal liability to include vendors, in the event of a network security breach, is also on the table. Current legal obligations are restricted to operators. Huawei, it seemed, welcomed the proposals. “It is up to policymakers, regulators, and the industry to work out the details, but such an initiative makes a vital contribution to making the debate about 5G more fact-based”, the Chinese company said in a statement quoted by Reuters.

Vodafone has close ties with Huawei in the UK, operating one of the vendor’s innovation facilities there (another is maintained with BT). Alongside Vodafone and BT-owned EE, Huawei is also among the founding members of the 5G Innovation Centre at the University of Surrey. Huawei regularly highlights the UK as a hub of R&D activity with Vodafone (with other prominent centres including Spain and Turkey – Vodafonewatch, passim).

In the UK, which sits within the Five Eyes security alliance from which much of the pressure on Huawei is emanating, the government is auditing the country’s telecoms network infrastructure for the first time, and has warned telecoms companies to be wary of the outcome of the review when signing 5G deals. The review is expected to be wrapped up in March 2019, and the signs are not entirely encouraging for Vodafone UK and other operators hoping to maintain strong ties with Huawei. Gavin Williamson, the UK Defence Secretary, recently said he had “grave, very deep concerns about Huawei providing the 5G network in Britain. It’s something we’d have to look at very closely… We’ve got to look at what partners such as Australia and the US are doing… and we’ve got to recognise the fact, as has been recently exposed, that the Chinese state does sometimes act in a malign way”, he said. The UK’s National Cyber Security Centre has openly expressed misgivings about Chinese suppliers in the past. In April 2018, it warned telcos not to use ZTE because of concerns over the “long-term negative effect on the security of the UK”. In July 2018, a report by the Huawei Cyber Security Evaluation Centre (HCSE) oversight board, set up in 2010 to provide security assurances around the use of Huawei equipment in the UK, claimed that “shortcomings in Huawei’s engineering processes have exposed new risks in the UK telecommunication networks and long-term challenges in mitigation and management”. According to The Telegraph, the HCSE’s next Annual Report is expected to disclose that issues raised previously have not been fully addressed, and will criticise the Chinese supplier over the security of its technology.

A report in La Stampa suggested the Italian government will use a “golden power” to ban both Huawei and ZTE from supplying 5G equipment, by annulling any penalties incurred by operators for cancelling contracts with the two Chinese suppliers. However, this was swiftly rebuffed. A government spokesperson, cited by Reuters, said there was no intention of going down that route. The spokesperson added that “critical issues” relating to national security had not yet emerged. That is not to say there is no substance in the La Stampa report. The newspaper indicated the Italian government was – like many others – under pressure from the USA to ban Chinese suppliers. “We are absolutely sensitive to the concerns expressed by Washington, and we fully agree on the need for a stop against Huawei and ZTE”, said a spokesperson for the Italian government, quoted by La Stampa. At the very least, there are question marks over which way the Italian government will eventually fall over the question of Chinese suppliers. Aldo Bisio, CEO of Vodafone Italy (VfIt), recently lauded Huawei as an important network partner and “will remain so unless otherwise indicated by government”. Biso was speaking at a press conference relating to 5G network trials in Milan, where VfIt is working closely with both Huawei and Nokia (Vodafonewatch, #171).

SIRO, Vodafone Ireland’s (VfIr) wholesale fibre joint venture (JV) with the country’s Electricity Supply Board, said it had raised security concerns with Huawei, its main network partner. It was apparently reassured. “While we continue to monitor the situation, it is important to note that SIRO operates an access-only network, not a core network – which is the focus of recent media coverage”, a JV spokesperson told the Irish Independent. “We have been in liaison with Huawei about their security standards and we remain in partnership with them”, the JV added. In November 2017, SIRO awarded a EUR25m (£22m) equipment supply contract to Huawei, to support the roll out of its fibre-to-the-building (FTTB) network (Vodafonewatch, #160). As part of FTTB plans, the JV trialled XGS-PON technology from Huawei in early-2018 (Vodafonewatch, #161).

Regarding developments beyond Europe, a Vodafone spokesperson was quoted by the Financial Times as saying that Group OpCos with Huawei equipment in their core networks will continue to operate as “normal”. This seemed primarily a reference to OpCos in Africa, where Huawei, along with ZTE, is under much less scrutiny than developed markets in the West.

By contrast, in Australia and New Zealand, authorities do not appear to make a distinction between core and RAN equipment – no doubt to the chagrin of Read. In both countries, Huawei and ZTE are banned from supplying all types of 5G kit (Vodafonewatch, #168). The thinking among Australian security agencies is that 5G effectively collapses the separation between edge and core networks, making it impossible to confine suppliers to the RAN. Vodafone Hutchison Australia (VHA) is under no immediate pressure because its core network suppliers are Ericsson and Nokia. If authorities decided it was unacceptable to have a Huawei-supplied 4G core network to support the non-standalone version of 5G New Radio, VHA would clearly be unaffected. The decision to bar Huawei, however, has thrown into disarray plans by TPG – VHA’s putative merger partner – to build its own mobile network (see separate report). Vodafone New Zealand (VfNZ) has flagged Nokia and US-based Ciena as key 5G enablers, but appears largely unexposed to Chinese suppliers (Vodafonewatch, #164 and #170). There was no strong public reaction from VfNZ when the government blocked incumbent Spark from using Huawei 5G equipment in November 2018. CEO Jason Paris – who is seeking to lean out the OpCo in preparation for another flotation attempt (Vodafonewatch, #170 and #171) – is reportedly not so keen on immediate 5G investment in the absence of strong evidence that consumers will splash out more than they do for 4G services. “If we released 5G tomorrow in New Zealand, I don’t think you’d be willing to pay NZ $5 [EUR3.03/£2.66] or NZ $10 more for it”, he told the New Zealand Herald. “As an industry, we have to get out of this ‘invest more and get less’ mode”, he added.

Image: Open Grid Scheduler / Grid Engine / Flickr (CC0 1.0)

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