Australia bans Huawei from 5G network deals due to security issue

Australia government has banned China-based telecom equipment supplier Huawei from supplying equipment for its 5G mobile network, Reuters reported.
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The development will benefit rivals such as Sweden-based Ericsson, Finland-based Nokia, Korea-based Samsung and China-based ZTE.

Optus, Singtel, Vodafone, among others, are the leading telecom operators in Australia. It is not clear whether the Australian government ban on Huawei will impact its present deals with telecom operators.

Earlier, Huawei reported revenue of CNY325.7 billion (+15 percent) with operating margin of 14 percent in the first six months of 2018. The company did not disclose the revenue from its telecom equipment business. Huawei has also become the second largest smartphone supplier in Q2 2018, beating Apple.

Telecom industry association GSMA earlier said Asia Pacific will be the world’s largest 5G market by 2025. Leading 5G markets in Asia will be Australia, China, Japan and South Korea. Asia will have 675 million 5G connections by 2025, accounting for more than half of the global 5G subscribers globally.

Mobile operators in Asia will invest almost $200 billion over the next few years in upgrading and expanding their 4G networks and launching new 5G networks, GSMA said. The ban on Huawei will be a major disappointment for the telecom equipment firm because it presently spending huge funds on the development of 5G solutions.

The United States, the home to telecom operators such as Verizon, AT&T, T-Mobile and Sprint, has already largely shut out Huawei from the lucrative US market over national security concerns.

The government of Australia said in a statement issued on Thursday that telecom equipment suppliers who are likely to be subject to extrajudicial directions from a foreign government would leave Australia’s network vulnerable to unauthorized access or interference.

The official statement did not name the Chinese firm specifically, but a government official who declined to be named said the order was aimed at Huawei and precluded its involvement in the network.

Chinese law requires organizations and citizens to support, assist and cooperate with intelligence work.

Huawei’s Australian arm, which denies it is controlled by Beijing, said on Twitter on Thursday that the action was an “extremely disappointing result for consumers”.

Huawei’s involvement in the network rollout, and resistance to it from Australia’s security agencies, has become a flashpoint between the trading partners in recent months as a row over alleged Chinese meddling in Australian politics deepened.

Australian security authorities have worried Huawei’s ties to the Chinese government opened a possibility that its equipment could be used for espionage, drawing increasingly pointed denials from the firm.

Huawei Technologies, the world’s largest maker of telecom network gear and the No. 2 smartphone supplier, offered Canberra complete oversight of 5G network equipment, which could include base stations, towers and radio transmission equipment.

Baburajan K