What Significance Does The UK Rebuff Of US Warnings On Huawei Holds?

  • Jan 15, 2020 GMT
  • Team Kalkine
What Significance Does The UK Rebuff Of US Warnings On Huawei Holds?

Huawei and the 5G Technology

5G or 5th Generation mobile network is the latest technology in the mobile telecommunications that will enable its users to perform more functions than just high-speed browsing and surfing at present, such as interconnecting and controlling entities such as machines, devices as well as various objects. The ascent of this technology which already begun with the 4th Generation mobile networks, with technologies like smart home and other smart products. 5G is expected to reach a speed of up to 100 gigabits per second (GBPS), approximately 100 times faster than the current 4th Generation technology.

Huawei, the Chinese telecom giant and mobile manufacturer is one of the pioneers of the 5G technology, creating one of the world’s first semiconductor chip or processor, called the Balong 5000, that would be inculcated in all of company’s smart phones to support this next-generation technology, to enable high speed internet and communication. The company launched its first smart phone supporting the 5G technology on 26th July 2019, following which, the Chinese government also gave a go-ahead to all the telecommunication companies in the country to begin rolling out of 5G services.

In the United Kingdom, 5G technology has already been rolled out in around 50 towns and cities by major telecom giants such as Vodafone, O2, Sky Communications, Three and EE. The technology had started rolling out in the middle of 2019, over a small group of carrier phones from companies such as Samsung, OnePlus, LG and Huawei. Users have consistently been able to clock speeds of 200 Megabits per second (MBPS) to 400 Megabits per second, while the highest clocked speed has been approximately of 550 MBPS over the mobile network. This clearly indicates that the technology is still not stable and will need a lot of further improvement in the United Kingdom. Huawei carriership of 5G services has been the talk of the town since its inception, primarily because of the United States of America raising security concerns around the carrier’s 5G services, amidst a full-blown trade war with China. Let us have a closer look into the issue.

Background of US-Huawei Conflict

The story behind the conflict, began around 2 years back, when in the month of February 2018, FBI (Federal Bureau of Investigation) Director first warned the citizens of USA not to buy Huawei smartphones. This was followed by a report, which revealed that Facebook gave Huawei illegal access to user data, following which a lot of major countries such as Australia banned Huawei and asked telecommunication and technology companies to stop working with Huawei. Later that year, Huawei was also caught cheating on a benchmarking test. This was followed by the United States of America, in January 2019, putting Huawei under 23 indictments for theft of trade secrets as well as fraud. In the meanwhile, US officials stated that any country using the technology from Huawei poses a threat to the United States. Google also withdrew its products as well as Android support from all Huawei devices, causing the Chinese Giant to develop its own operating system to support its devices.

UK rebuffs US warnings on Huawei

On 14th January 2020, British officials met with a delegation from Donald Trump’s administration. This meeting was held so that the delegates from the United States could warn their British Counterparts regarding the threats of using the 5G technology from Huawei. This development followed April 2019, restricted access to non-core parts of the 5G network, approved by the then Prime Minister of UK, Theresa May. This decision was later put on hold by the government, following an intervention from the United States, which had issued similar warnings to its allies and other European Countries.

Huawei basically has two operating activities in the United Kingdom, one is the selling of its hardware such as smartphones as well as Tablets and Laptops, while the other operating segment deals in providing network hardware to the telecom industry.

After the recent meeting between the US and British Officials, the UK government sources reported that they had already estimated the kind of threat from Huawei that the US presentation demonstrated, and those threats and risks were already considered in terms of planning of the rolling out of the 5G technology by Huawei in the country. After this, it was also reported that the UK doesn’t plan to change its decision post this presentation, as the experts believe that any threats or risks coming forward are manageable. However, currently, the MPs seem divided on a decision regarding giving permission to Huawei to implement its services in the country or not. Previously, the current prime minister Mr Boris Johnson had also stated that it was up to the US to provide an alternative to Huawei’s 5G technology, but UK doesn’t want to spoil its intelligence sharing relationship with the US.

Huawei’s 5G technology is considered to be superior as compared to others, and if a positive decision is made in terms of allowing Huawei to bring its Technology in the United Kingdom, the following companies could have a huge impact, which would further have an impact on the market as a whole. Hence, it is important to look at the current stock performances from these companies.

Vodafone Group Plc Stock Price Performance

(Source: Thomson Reuters) Daily Chart as on 15-January-20, before the close of the London Stock Exchange Market

On 15th January 2020, at 11:45 A.M GMT, while writing this report, Vodafone Group Plc’s share was reportedly trading at a price of GBX 156.43 per share on the London Stock Exchange Market, a decline in the price of 0.07 per cent or GBX 0.11 per share, compared to the last day’s closing stock price, that was reportedly at GBX 156.54 per share. The market capitalisation (M-Cap) of the company was at GBP 41.907 billion.

The share price of the company has seen an upward change of around 5.24 per cent, in the previous one year, from the value of GBX 148.64 that the share achieved on January 15, 2019. The Vodafone Group Plc share has also displayed an upward change in the last six months of the year, of around 20.15 per cent from the share price of GBX 130.20 that the Vodafone Group Plc’s share set on July 15, 2019. The company’s stock depicted a positive change of around 6.97 per cent, within the previous month from the stock price of GBX 146.24 per share that the stock hit when the markets closed on December 13, 2019.

BT Group Plc Stock Price Performance

On 15th January 2020, at 11:50 A.M GMT, while writing this report, BT Group Plc’s share was reportedly trading at a price of GBX 184.18 per share on the London Stock Exchange Market, a decline in the price of 0.77 per cent or GBX 1.42 per share, compared to the last day’s closing stock price, that was reportedly at GBX 185.60 per share. The market capitalisation (M-Cap) of the company was at GBP 18.341 billion.

The share price of the company has seen a downward change of around 19.90 per cent, in the previous one year, from the value of GBX 229.95 that the share achieved on January 15, 2019. The BT Group Plc share has also displayed a downward change in the last six months of the year, of around 3.06 per cent from the share price of GBX 190.00 that the BT Group Plc’s share set on July 15, 2019. The company’s stock depicted a negative change of around 8.66 per cent, within the previous month from the stock price of GBX 201.65 per share that the stock hit when the markets closed on December 13, 2019.

TalkTalk Telecom Group Plc Stock Price Performance

(Source: Thomson Reuters) Daily Chart as on 15-January-20, before the close of the London Stock Exchange Market

On 15th January 2020, at 11:55 A.M GMT, while writing this, TalkTalk Telecom Group Plc’s share was reportedly trading at a price of GBX 115.50 per share on the London Stock Exchange Market, a decline in the price of 1.11 per cent or GBX 1.30 per share, compared to the last day’s closing stock price, that was reportedly at GBX 116.80 per share. The market capitalisation (M-Cap) of the company was at GBP 1.338 billion.

The share price of the company has seen an upward change of around 1.58 per cent, in the previous one year, from the value of GBX 113.70 that the share achieved on January 15, 2019. The TalkTalk Telecom Group Plc share has also displayed an upward change in the last six months year, of around 10.53 per cent from the share price of GBX 104.50 that the TalkTalk Telecom Group Plc’s share set on July 15, 2019. The company’s stock depicted a positive change of around 10.00 per cent, within the previous month from the stock price of GBX 105.00 per share that the stock hit when the markets closed on December 13, 2019.

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