Nokia reported its quarterly results on Thursday, and the numbers suggest that bans and restrictions on Huawei’s 5G equipment are increasing demand for alternative suppliers.
In the fourth quarter, Nokia recorded profits of £652 million ($852 million), up from £629 million ($822 million) a year earlier. Revenue rose three percent to £6 billion ($7.8 billion).
Although the growth is modest, it exceeded analyst expectations, indicating that uncertainty and restrictions around Huawei’s 5G equipment have provided a boost to Nokia’s business.
Nokia CEO Rajeev Suri said he expects the company’s performance to strengthen further this year as the industry makes “a fast and meaningful shift” toward 5G networks.
Rollouts of next-generation networks are frequently a lucrative period for equipment vendors, particularly when a major competitor is excluded from certain markets by national policies.
Countries such as the United States and Australia have banned Huawei’s 5G equipment citing national security concerns, while others, including many in Europe, are still weighing potential restrictions.
Opting for Rivals
Even where formal bans are not yet in place, some network operators are choosing alternative suppliers to avoid delays in 5G rollouts or the costs and complications of later switching from equipment that might be barred.
For example, Vodafone recently announced it would stop purchasing 5G core equipment from Huawei across its European operations in response to the possibility of bans and regulatory changes.
In Australia, the government’s decision to bar Huawei forced operators like Optus to change suppliers. Optus acknowledged that the restriction compelled it to build its 5G network without what it regarded as the best available equipment.
Optus CEO Allen Lew told The Sydney Morning Herald that “from a pure technology perspective, Huawei is probably ahead of the other three,” but added that the equipment from other suppliers “will enable us to provide a globally competitive service.”
Optus launched a limited version of its 5G home broadband service and partnered with Nokia for the deployment; Nokia is supplying 5G RAN equipment and Fastmile 5G customer premises equipment (CPEs).
Industry observers say operators’ decisions to choose rival vendors will increase revenue opportunities for Huawei’s competitors. Those choices also mean some operators must accept potentially more expensive and less feature-rich equipment, and may face slower rollouts because of reduced competition in the market.
Conversely, Canada appears inclined to allow Huawei equipment in its national 5G networks despite debate. Scott Jones, head of Canada’s Centre for Cyber Security, has argued that excluding specific vendors could increase risk because if one remaining supplier’s equipment were compromised, it would constitute a larger share of the network infrastructure.
Huawei has repeatedly stated it would refuse any government request to use its equipment for surveillance or attacks on another country. Company representatives note that being caught engaging in malign activity even once would be catastrophic for its global business.
Meanwhile, the United States has filed charges against Huawei and continues to urge allies to avoid using Chinese 5G vendors.
Commenting on market developments, Rajeev Suri told Finnish public broadcaster YLE, “We’re following the situation closely. We’re here to help our clients when they need it.”
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