Vodafone to take £169m hit on stripping out Huawei from EU core network
Vodafone has said it will remove Huawei systems from its sensitive “core” networks in Europe at a cost of around 200 million euros (£169 million) in the wake of decisions to restrict the Chinese firm’s 5G role.
The mobile phone giant confirmed it would take five years to strip out equipment made by Huawei from its so-called core – the centre of the telecoms network that processes customer data.
Vodafone has a small amount of Huawei equipment in its core network across Europe, but is already largely compliant with the UK rules.
It comes after decisions by the UK Government and the European Union on the future of Huawei in the 5G network, which will see it barred from having a role in safety-related and critical networks.
Vodafone chief executive Nick Read said: “We have now decided, as a result of the EU toolbox and the UK Government’s decision, to take out Huawei from the core.
“This will take around five years to implement at a cost of approximately 200 million euros.”
While Vodafone UK does not use Huawei in its core network, the group uses a mix of Huawei, Ericsson and Nokia equipment for its 4G and 5G masts in Britain.
Rival BT recently said the UK decision on Huawei will cost it around £500 million over the next five years.
The group, which also owns and runs the EE mobile network, had previously warned that it could take seven years to completely remove Huawei from UK networks.
The comments came as Vodafone reported a 0.8% rise in organic revenues over its third quarter to the end of December.
A weaker performance in Europe – where revenues fell 1.4% – was once again offset by a solid result worldwide, where revenues jumped 9.1%.
In the UK, it saw a pick-up, with revenues rising 0.6% against a flat performance in the previous three months.
It added 134,000 mobile contract customers across the UK in the quarter, but saw new broadband customer additions fall to 20,000 as competition took its toll.
Shares lifted as much as 3% on Wednesday morning after the update, before settling around 1% higher.
Joe Healey, investment research analyst at The Share Centre, said it was reassuring that Vodafone remains on track with business targets.
He added: “The business remains exposed to the key global drivers of growth including the demand for data and increased smartphone penetration worldwide.
“Cost-cutting measures also seem to be making good progress, with the group utilising AI to help improve efficiencies and customer experience, although the stripping of Huawei systems out of its core network will, over the coming years, dent this.”
