BT Enters 5G Deal with Ericsson to Help Phase Out Huawei Equipment

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BT Enters 5G Deal with Ericsson to Help Phase Out Huawei Equipment

 BT Enters 5G Deal with Ericsson to Help Phase Out Huawei Equipment

Summary

  • BT has entered into a deal with Ericsson, where it would use its 5G equipment, like radio antennas, base stations and others.
  • BT has also signed a similar deal with Nokia to supply 5G equipment
  • Huawei was banned by the UK government from rolling out its 5G network. This prompted all other carriers to phase out the Chinese firm’s gear from their infrastructure by 2027.

 

British telecom giant BT Group Plc (LON: BT.A)  has signed a deal with Swedish telecom equipment major Ericsson for supplying 5G equipment to upgrade its EE mobile network. This would include 5G radio antennas, base stations and other equipment for its network across the UK cities. The company said it would source 50% of its equipment from Ericsson.

Previously, the UK government had called to ban Huawei from its 5G rollout, forcing other major carriers to help it phase out the Chinese tech firm gear from their infrastructure by 2027.

Incidentally, BT has also entered a deal with Finnish major Nokia last month to help them with this transition process. 

The ousting of Huawei from the 5G equipment market in the UK and replacing them with other equipment makers is a major victory for both these firms, as they have been facing fierce competition over the past few years from cheaper Chinese equipment.

On BT’s side, the company is pushing hard to roll out its 5G services at the earliest, so as not to lose market.  

 

BT and Ericsson deal

The press release by Ericsson on the BT deal states that it will supply 5G equipment to BT which will cover UK cities, such as London, Edinburgh, Belfast, Cardiff and others. Ericsson would supply 50% of the equipment to BT for the 5G traffic. It would also help in upgrading the existing 2G and 4G RAN (Radio Access Network) infrastructure. 

While commenting on the deal, Ericsson president and CEO of Börje Ekholm said that they are delighted to be partnering with BT in delivering its 5G ambitions. They are pleased to deploy their equipment across major UK cities and strengthen their relationship, while also demonstrating their technological leadership in providing 5G network access in population-dense and high traffic locations. 

 

He added that 5G would play a critical role in helping the UK meet its ambitions of stimulating next-generation wireless technology for its users and accelerating the digitization process of the entire economy. 

Ericsson has a long connection with the UK for over 100 years and has a robust supply chain network better than its competitors. 

Nokia deal

The equipment deal between Nokia and BT was announced on 29 September 2020. As per the agreement, Nokia would provide base stations and other equipment to BT so that it can offer its customers super-fast 5G internet. 

For BT, the total cost of the transition from Huawei equipment would cost it around £500 million. For the complete replacement of its 5G equipment, BT has already planned to tie up with multiple vendors. BT officials said that the company would stick to its commitment to roll out next-generation technology on its fixed and mobile networks. 

Huawei supplied equipment

In July, the UK government had decided to ban Huawei supplied 5G telecom equipment after months of deliberation over their susceptibility to espionage. The United States has also accused Huawei of supplying equipment that has loopholes and would allow Chinese intelligence agencies to spy on their country. 

The 5G equipment, which is currently being rolled out across several countries, was provided at a very competitive rate by Huawei than other vendors.

But despite all the allegations, the US has not been able to provide strong evidence against the Chinese company. Thus, several countries initiated their investigation into the matter and have either decided not to ban Huawei or are encouraging other telecom network companies to source equipment to ensure adequate security.

BT’s financial and operating performance

The company came out with its H1 results on 29 October. The total revenue reported by the company for the period was £10.59 billion, which was 8 per cent lower than what was reported for in the same period in 2019. The basic earnings per share for the period stood at 8.6p, which is 20 per cent lower than what was reported last year.

Currently, the company has a major cash outgo as it is paying pensions to nearly 280,000 people in the country. Besides, the pandemic has hit the firm’s revenue and forced it to cut down its dividends this year, which is also a first in its history. It has suspended dividends till 2022.

The Share price performance of BT Group Plc on the LSE (3 months)

(Source- Thomson Reuters)   

On 29 October 2020, the share of BT Group plc once traded at GBX 108.07 (9.40 AM GMT+1), gaining 6.44 per cent over the previous day’s close. Though, by the end of the day the stock was down by 2.49 per cent to GBX 99.12. 

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