Huawei, ZTE win China Mobile contract for converged 5G and 4G network
Chinese telecoms equipment giants Huawei Technologies Co and
ZTE Corp have secured the rights to build the converged 5G and 4G core network
for China Mobile, the world’s largest wireless carrier by subscribers,
illustrating domestic carriers’ commitment to infrastructure suppliers that
face challenges in overseas markets.
The two Shenzhen-based companies will each get about 50 per
cent of a contract to provide equipment and services worth 14.9 billion yuan
(US$2.22 billion) in 31 provinces around the country, according to the bid
results released by China Mobile in late September.
Huawei has secured a deal for 6.4 billion yuan worth of
equipment and 1.08 billion yuan in services, according to the statement, while
ZTE will contribute 6.57 billion yuan in equipment and 891 million yuan in
services. The converged mobile network serves as the next stage of China
Mobile’s 5G roll-out, which involves a dual-mode network strategy to reduce
costs and ensure a smooth migration to the newer wireless standard.
The deal is yet another vote of confidence for Huawei, which
continues to be favoured by state-backed telecoms operators despite remaining
under US sanctions that have curtailed its access to advanced chips. It comes
just two months after Huawei secured more than 60 per cent of another contract
to provide 700-megahertz base stations for China Mobile and China Broadcasting
Network, which was established last year.
In that deal, ZTE took 30 per cent of the contracts, leaving
the China operations of Sweden’s Ericsson and Finland’s Nokia small slivers of
the network. Out of the three offers available, Ericsson China was awarded just
9.4 per cent of one while Nokia Shanghai Bell, a joint venture, secured about
10 per cent of another.
The Nordic hardware makers have faced increasing
difficulties growing their businesses in China as international tensions have
locked Huawei out of international contracts on national security grounds.
Ericsson had protested Sweden’s decision to keep Huawei from contributing to
the country’s 5G network, but courts upheld the ban.
The US warned many of its European allies not to use Huawei
equipment in their networks, a move criticised by both Huawei and Chinese
officials. Other countries in the region, including the UK, have also limited
Huawei’s access to their networks. Australia banned Huawei and ZTE 5G equipment
in 2018. The US government is also funding the removal of Huawei equipment at
rural telecoms carriers.
Huawei’s efforts to assuage concerns that its overseas
operations might be subject to Chinese data and security laws have had little
success. But at home, the telecoms industry continues to rally around Huawei.
Its network equipment remains popular there even as its smartphone business has
languished under sanctions that have kept it from acquiring advanced
semiconductors produced using US-origin technologies.
In August, Huawei reported its worst interim revenue decline
in decades, with the revenue falling to 320 billion yuan in the first half of
the year, a 29.4 per cent decline from the same period in 2020. The company’s
mainstay network gear business declined to 136.9 billion yuan, down 14.2 per
cent from a year earlier.
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