Tele2 postpones 5G network deal due to Huawei issue

Tele2 CEO Anders Nilsson said the telecom operator has postponed the selection of the 5G network supplier in the wake of the U.S. sanctions against Huawei Technologies, Reuters reported.
Tele2 Capex 2018
U.S. President Donald Trump’s administration has forced Huawei to go slow on supplying 5G network because Huawei cannot buy components from American companies without a formal approval.

Tele2 CEO Anders Nilsson said the biggest impact of the restrictions and security concerns was being felt through a delay in 5G investment across Europe. The Huawei security issue has negatively impacted the rollout of 5G services across Europe.

Tele2 is yet to sign its 5G network deal. Tele2 is Sweden’s second largest telecoms company with operation in the Baltic countries. “We’re right now talking to all the vendors, but decisions are postponed. This is not only Huawei, this is all vendors,” Tele2 CEO Anders Nilsson said.

“We have a global supply chain, so whoever you buy equipment from you will find components from China. Even if we buy equipment from Ericsson, which is our neighbor here, you will find Chinese hardware and parts in that equipment,” Nilsson said.

Consumers are likely to face higher prices if governments ban Huawei, limiting competition to Ericsson and Nokia. Several analysts believe that 5G network supplied by Ericsson and Nokia are too expensive.

“The main reason to do 5G right now is because it is a good way to build capacity, but we can continue building capacity in 4G. So 5G is not something we need to do right now,” he said.

He expects a drawn-out 5G rollout, with peak capital spending of about 3-3.5 billion Swedish crowns, largely in line with Tele2’s Capex of 3 billion crown or $323 million last year which included no 5G investment.

Tele2 is focused on turning itself into a cash generative company, growing revenues by improving consumer retention and bundling services together.

The company has transformed its business to achieve its goals, in recent years exiting several regions and buying cable TV firm Com Hem last year.

In February, it doubled its cost savings target from the ComHem deal to 900 million Swedish crowns.

Nilsson said he expected Tele2 to be able to deliver cost savings of billions of Swedish crowns on top of that target, by integrating Swedish operations under a common IT infrastructure and integrating the tech service teams.