Despite the US campaign against the company over the last two years, Huawei has managed to grow its 5G business, securing dozens of contracts with telecom carriers, many of them in Europe.
Britain’s “decision will prompt a reassessment in European capitals about whether they will be able to mitigate the risk of including Huawei in their 5G networks,” said Carisa Nietsche, a researcher at the Center for a New American Security, a Washington think tank.
“The United Kingdom has long been a trendsetter in Europe due to their risk assessment chops,” she said. Now that Britain has banned Huawei, “it’s possible that other European countries may follow,” including France, she said.
Germany could be next
Huawei called the UK ban disappointing, saying it was based on US trade policy, not security concerns.
The company would “continue fulfilling our obligations to customers and suppliers,” spokeswoman Evita Cao told CNN Business. She said Huawei would survive “no matter what future challenges the company faces.”
Huawei said earlier this year that it has secured 91 commercial 5G contracts, more than half (47) are in Europe, 27 are in Asia and 17 are elsewhere in the world. The company declined to update those figures on Wednesday.
But US sanctions have dashed the company’s hopes for global domination.
The UK ban will mean a smaller global market and less profit for Huawei’s 5G equipment business, according to Jefferies analyst Edison Lee.
“But not every European country will necessarily follow the UK’s decision,” he added.
There’s a price to be paid
Some may be worried about retaliation. China has already signaled it will push back on actions taken against its national tech champion. Ministry of Foreign Affairs spokeswoman Hua Chunying said on Wednesday that “the UK has made a wrong decision that severely undermines Chinese companies’ interests.”
“China will view this seriously and comprehensively” she said, adding that the country will “take all necessary measures” to safeguard its interests.
There’s another price to be paid. While Britain’s about-face was a big win for the Trump administration, it dealt a severe blow to the country’s rollout of 5G networks. Officials warned the launch of the ultra-fast network could be delayed by up to three years. It could cost billions to swap out Huawei kit.
The same will hold true if other countries follow suit, and will also make carriers reluctant to upgrade now, according to Lee, of Jefferies,
“The UK decision to ban Huawei will give even less motivation for telecom companies to quickly migrate to 5G,” he said.
“When they are forced to change the vendor that they have already chosen, and also to rip out equipment that they have been using with no problems in the past five years, this will be a huge disruption to their business plans,” he said.
— Shawn Deng and Isaac Yee contributed to this report.