PARIS/FRANKFURT, Germany—Huawei faces fresh challenges in Europe after Germany’s Deutsche Telekom announced it would review its vendor strategy and Orange said it would not hire the Chinese firm to build its next-generation network in France.
The shift by the national market leaders, both partly state-owned, follows Huawei’s exclusion on national security grounds by some U.S. allies, led by Australia, from building their fifth-generation (5G) mobile networks.
U.S. officials have briefed allies that Huawei is ultimately at the beck and call of the Chinese state while warning that its network equipment may contain “back doors” that could open them up to cyber espionage.
The Deutsche Telekom review comes as U.S. regulators scrutinize the proposed $26 billion takeover by its T-Mobile US unit of Sprint Corp., which is controlled by Japan’s Softbank.
Softbank, which is days away from listing its wireless unit in Tokyo, plans to replace its 4G network equipment from Huawei, Nikkei has reported.
Tensions have been heightened by the arrest of Huawei’s chief financial officer in Canada for possible extradition to the United States.
“We don’t foresee calling on Huawei for 5G,” Orange CEO Stephane Richard told reporters in Paris. “We are working with our traditional partners—they are Ericsson and Nokia.”
Richard said the security concerns were legitimate: “I absolutely understand that all of our countries, and the French authorities, are preoccupied. We are too.”
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Deutsche Telekom, Europe’s largest telecoms company, said it was reviewing its vendor plans in Germany and the other European markets where it operates, given the debate on the security of Chinese network gear.“Deutsche Telekom takes the global discussion about the security of network equipment from Chinese vendors very seriously,” the company said in response to a Reuters query.
Telekom already pursues a multi-vendor strategy, relying above all on equipment from Ericsson, Nokia, Cisco, and Huawei. “Nevertheless we are reassessing our procurement strategy,” it said.
The shift is significant because, German officials have said they see no legal basis to exclude any vendors from the buildout of fifth-generation networks in response to the warnings from Washington.
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