Telefonica looks for 5G network suppliers in addition to Huawei

Telefonica said it will buy some of the core equipment for its 5G mobile network in Spain from Huawei but also select a second provider next year.
Huawei 5G base station in China
The move marks a strategic shift for Telefonica which previously relied only on mobile network from Huawei. China-based Huawei provided Telefonica’s 3G and 4G core networks in Spain.

U.S. President Donald Trump in May placed Huawei on the country’s trade blacklist, citing national security concerns. Huawei has repeatedly denied that its products pose a security threat, Reuters reported.

Britain’s Vodafone and Germany’s Deutsche Telekom are also opting for multiple vendors. But Deutsche Telekom has called a halt to any new contracts until the debate on whether to bar Huawei on national security grounds yields some answers.

When the U.S. put Huawei on the blacklist, Telefonica had said it was reviewing the details and potential impact.

Telefonica’s decision to buy the core network, which is the main hub of a mobile network, from Huawei is significant for the China-based network supplier. Telefonica has not decided yet who will provide the rest of its kit, such as its 5G antennas in Spain. Nokia and Ericsson are keen to work with Telefonica in Spain.

Telefonica’s Capex touched €2.207 billion (+5.7 percent) during Jan-Sept 2019 including 5G spectrum obligations of €1.425 billion.

Telefonica earlier said investment in fiber is key for the telecom operator and will allow the generation of revenues and efficiencies with the capture of savings due to the dismantling of copper networks. Telefonica has 22.7 million FTTH connections in Spain.

Progress in 5G was driven by leadership in fibre and network virtualisation in 10 countries. Telefonica’s 5G Technological Cities project reached Talavera, Segovia, Malaga, Alcobendas and Galicia with new use cases such as virtual reality in bank branches. O2, Telefonica’s UK business, launched 5G network in October covering cities such as Belfast, Cardiff, Edinburgh, London, Slough and Leeds.

Spain, Brazil, Germany and the United Kingdom are Telefonica’s four main markets though the Group was present in 14 countries the end of the third quarter of 2019. These four geographies concentrated 218 million accesses, representing 63 percent of the total; nearly 80 percent in revenues, OIBDA and operating cash flow.