Vodafone plans to remove Huawei kit from its main mobile networks in Europe, but says the impact of the UK government's decision to impose a limit on "high risk sellers" (HRV) equipment will be minimal. Last week it was confirmed that UK carriers would be allowed to use Huawei equipment in the radio layer of their 5G networks, but that would be limited to 35% of masts and traffic. The government has also formally banned the use of HRV on sensitive parts of the network.
Vodafone Huawei
Vodafone CEO Nick Read said he would have to exchange a small amount of kit in the UK, but that was the most compliant. Like its competitors, Vodafone UK did not intend to use Huawei as a provider for its 5G core. However, it uses Huawei products for its main infrastructure in Spain and Eastern Europe. Following the Westminster decision and recent EU directives, it will phase out this team at a cost of €200m over the next five years. However, Read warned that if the EU were to replicate the UK's 35% ceiling on the use of Huawei equipment in the 5G radio layer, the rollout of next-generation networks could be delayed by five years. He also suggested that rising costs could be passed on to European consumers. The comments came as Read presented the company's third-quarter results. Organic services revenue increased 0.8% to €9.73 billion during the period, with the company emphasizing its pursuit of a digital-first business model and maximization of its assets. Read said that the division of its European tower assets into a separate TowerCo is progressing well and that it is preparing for a possible IPO in early 2021, depending on market conditions. "I am pleased with the pace at which we executed on our business and strategic priorities, which allowed us to maintain our momentum during the quarter," Read said. "Competition in Europe remains tough, mainly in the value segment, but we have continued to improve customer loyalty and growth in broadband, and we have achieved good growth in Africa." We expect a gradual improvement in service revenue growth in the fourth quarter, led by Europe. In the UK, service revenue rose 0.6% on the back of a larger customer base and the success of Vodafone's new unlimited data plans. The company said it added 134,000 new contract customers during the period and had 2 million subscribers at its new rates.