Huawei wins deal to help build Telefonica’s 5G network in Germany, subject to approvals
- Telefonica Deutschland, which operates Germany’s second-largest wireless network, picked Huawei and Finland’s Nokia to supply its 5G network upgrade
- The deal is subject to the firms being certified by German authorities
China’s Huawei Technologies just got a seal of approval from one of Germany’s biggest telecom companies, Telefonica Deutschland.
Telefonica’s German unit, which operates the country’s second-largest wireless network, picked Huawei and Finland’s Nokia to take an equal role supplying its fifth-generation mobile phone network upgrade, the company said in a statement Wednesday. The deal is subject to the firms being certified by German authorities, it said.
The announcement is a boon to Huawei after Deutsche Telekom said last week it has stopped ordering new 5G equipment because of political uncertainty over Chinese suppliers. Huawei has repeatedly denied allegations its equipment could be used for espionage.
There’s one caveat, though. The German government is currently drawing up security guidelines for the country’s 5G network expansion, in a move that is expected to require certification of equipment, including antennas.
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The deal with both firms to supply the less-sensitive radio access network “will be subject to the successful safety certification of the technology and the companies,” Telefonica Deutschland said in the statement. The company “is taking into account the ongoing political process of establishing these security guidelines without delaying the start of the 5G expansion.”
Telefonica Deutschland has not yet selected a supplier to upgrade the more-sensitive core network – the ‘brain’ that houses control functions – and will not do so until next year, Chief Executive Officer Markus Haas said on a call with reporters.
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The company’s shares fell 2.1 per cent at 11:24am in Frankfurt. Its strategy update, presented to investors in London this morning, indicated it would cut its 2019 dividend to 17 euro cents a share from 27 euro cents.
Telefonica Deutschland is targeting sales growth of at least 5 per cent through 2022 and is seeking to improve its profit margin during that period. The company is confident it can win more customers in rural areas and add fixed-line clients as well as corporate customers that install 5G in their factories, Haas said on the call.
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