Move will cost €200m but have limited financial impact on UK operations, says CEO Nick Read

Vodafone is to remove Huawei equipment from the sensitive, core parts of its mobile networks across Europe at a cost of €200m (£169m) over the next five years.

The group, which has 111 million customers across Europe, has taken the decision after the UK government’s move last week to limit the use of Huawei equipment in the country’s 5G network.

Nick Read, Vodafone’s chief executive, said the Huawei equipment replacement programme would have “very limited financial impact” on its UK operations as they were already mostly compliant with the new government measures.

However, he warned that if European nations were to follow the UK’s 35% cap on Huawei equipment in non-core parts of mobile networks – the masts and towers – it could delay 5G rollout in those countries by two to five years. In the UK, Huawei equipment has been banned from use in the core of 5G mobile networks, where data is processed, and from locations such as nuclear sites and military bases.

Read said if caps were introduced by other countries Vodafone would look to divert money intended for rolling out 5G to the wider replacement of Huawei equipment.

“We would reprioritise money we would have spent on rollout [of 5G] to replace equipment and that delays 5G rollout. It isn’t an issue in the UK but I wouldn’t want [caps] in Europe. It would be hugely disruptive,” he said.

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Read said no European countries had indicated at this stage that they intended to introduce caps but because the UK had done so, Vodafone wanted to make its position clear on the potential impact.

“We need to be rolling out 5G to underpin a competitive landscape in a digital society. The US is racing ahead, China is racing ahead. We can’t hold back 5G deployment and caps would be restrictive on that basis,” he said.

On Wednesday, Nicky Morgan, the culture secretary, said Britain could work with its allies to introduce another equipment provider to the UK market. With Huawei locked out of the core of 5G networks, and a cap on involvement in non-core systems, operators are left with just two large alternative suppliers in Nokia and Ericsson.

“We are very determined … that another provider of 5G equipment is needed in order to provide that resilience to our very important 5G network,” Morgan said.

“It may well be we have to work with our international allies as well to make sure we either get another provider who is operating elsewhere to operate in the UK, or potentially to perhaps have another company that’s able to offer that equipment so that we are able to have that resilience in our system.”

Last week, BT said limiting the use of Huawei equipment in EE’s 5G mobile and full-fibre broadband networks would cost it £500m over the next five years.

Last January, Vodafone “paused” the use of Huawei equipment in its core network across Europe because of the debate about security concerns involving the Chinese telecoms corporation.