Huawei rivals Nokia, Ericsson no shoo-in for 5G contracts as China seen favouring local champions
- Nokia and Ericsson stand to lose ground in China, the world’s largest market for 5G investments over the next few years
- The bulk of China Mobile’s initial tender for 5G equipment is expected to go to Huawei and ZTE, sources say
Finland’s Nokia and Sweden’s Ericsson are widely expected to gain from a wounded Huawei Technologies after the US banned the Chinese telecommunications equipment maker, the global market leader, from supplying its 5G network gear to federal agencies and cut off its access to American hi-tech suppliers.
But what those two European companies stand to win may be cancelled out by losing ground in China, where the upgrade to 5G networks is set to take place to better serve the country’s more than 1.4 billion mobile subscribers, according to analysts.
“I think the opportunities for Nokia and Ericsson will improve over time, but their combined 5G market share in China is likely to be lower than what they had during the [country’s] 4G roll-out,” Jefferies equity analyst Edison Lee said.
China Mobile, the world’s largest wireless network operator, called for a tender in March to supply 500 5G base stations, without stating the geographic coverage and timeline.
The Beijing-based state-owned telecoms operator may award the bulk of the tender to Huawei and ZTE Corp, while allocating five per cent to Ericsson and none to Nokia, according to people with knowledge of the matter.
“Based on the results of China’s 5G trials last year and my channel checks, 5G equipment from Huawei and ZTE performed the best, followed by those of Ericsson and the Nokia,” Jefferies’ Lee said. “So I won’t be surprised if Nokia didn’t win any share in China Mobile’s initial 5G tender.”