EU could face €40 billion challenge in removing Huawei 5G tech

EU is constantly making efforts to remove Huawei 5G tech solutions from its market, an industry report suggested, though this particular move could cost around €40 billion – just three times the European Commission’s estimate on this matter.

The European Commission has been trying for years to phase out Huawei and Chinese telecoms from its ground. It has imposed many laws and regulations on its allies to stop them from using China-made network technologies, which it considers high risk.

But it seems these efforts can cost the EU more than expected. GSMA reported that the EU Commission might have to spend around €30 to €40 billion ($34 billion to $46 billion) to remove Huawei 5G network tech solutions.

GSMA dropped this report as Brussels once again began pressuring its telecom operators to terminate equipment from Chinese suppliers such as Huawei and ZTE over the next three years. However, the new analysis says:

“… the mandatory removal would represent one of the most significant structural interventions in the European telecoms sector in decades.”

The report further breaks down the expenditure. Out of €30 to €40 billion, all mobile operators replacing base stations and other network hardware could account for €16 to €22 billion. The transport segment carrying traffic between sites may hold € 9 to €12 billion. Fixed broadband tools like fibre access gear can use €5 billion.

According to the estimation, the entire process would have cost just €10 to €13 billion in total, accounting for €3.4 to €4.3 billion in a year. The difference between the estimate and report analysis is that the latter includes fixed and transport costs as well.

In addition, the analysis highlights that the removal of Huawei 5G gear in the EU could impact more than just the cost. Excluding Chinese tech makers can significantly reduce competition without any pro-competitive elements.

Reduced competition will increase network equipment prices. Thus, mobile network costs can increase by 24% (which can rise to 42% if all sales went to the largest supplier), fixed broadband may cost an extra 19%, and transport networks by 10%.

GSMA further says that Huawei holds at least a quarter of the EU’s mobile network equipment market. Removing Chinese suppliers can increase the dominance of Ericsson and Nokia in the market.

(Image Credits: Huawei)