Samsung replaces Huawei in European 5G plans

The industry expects $1,14 trillion to be invested globally over five years

Photo: Telefonica Enrique Blanco

European mobile operators are set to mull expected swap of China’s Huawei as key supplier of their emerging 5G systems with Samsung Electronics. Still the process is in early stage but its forecast to be a very difficult battle, Reuters reported.

Those rumors were fueled by the surprise $6 billion which involved Samsung and US giant Verizon in September. Spain’s Telefonica and France’s Orange have been both involved in talks with the South Korean firm, company executives confirmed. Huawei’s hardware accounts for nearly half of the European 4G network that will form the foundation for super-fast 5G, alongside that of Nokia and Ericsson.

European operators are under pressure from the US to block the Chinese company for 5G systems that could in future be supporting services ranging from telemedicine to factory automation. Washington says there is a risk Huawei could spy for Beijing, though the firm has repeatedly denied this.

One problem for Samsung is that operators worry that its products will not be compatible with the existing 4G networks built by Huawei, and that it will cost hundreds of millions to rip these out and replace them rather than simply upgrade them. “They need to be extremely competitive,” said Telefonica Chief Technology Officer Enrique Blanco. “The cost of swapping the 4G is an extra cost for Samsung so, even if you are inviting them, it is difficult for them to be competitive.”

A Samsung spokesman said the idea that its equipment was not compatible with existing infrastructure was a misconception, but did not provide technical details. He declined to specify which European markets it was trying to enter, but said it hoped to replicate inroads it had made in Asia and the Americas. Verizon is using Samsung for various parts of its vast US network. “We had done some trials with them and given them a few markets to see how they would work and, and then it worked well,” Verizon’s Chief Product Development Officer Nicola Palmer told Reuters.

Orange Chief Technology and Innovation Officer Michael Trabbia said he, too, was considering Samsung in Europe. The two European countries where Orange has not yet chosen an equipment maker are Poland and Romania. “We can see that Samsung is becoming more and more credible on 4G and 5G,” Trabbia said. But he said Orange had tested both Samsung and Huawei equipment before opting for Nokia and Ericsson for its 5G systems in France. European operators have already spent billions of euro to roll out fibre optic networks in Europe, and 5G will empty  their pockets even more. The industry body GSMA expects $1,14 trillion to be invested globally over five years, 78% of it on 5G.

Europe’s biggest mobile operator, Deutsche Telekom, remains sceptical whether Samsung can be competitive in the short term, according to company sources and internal briefing documents. Analysts too say it will need to do more to compete with Nokia and Ericsson on their home turf.

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