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Nokia and Ericsson had become mummies of the Telecom world. The end of Huawei has resurrected them

Amit Agrahari by Amit Agrahari
4 June 2020
in Opinions
Ericsson, 5G, Canada, USA, Trump, Xi Jinping, Nokia, Huawei, China
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The global backlash against China and Chinese companies, especially telecom equipment sellers which were leading in the global 5G race like Huawei, ZTE, and Datang Telecom, has led to the revival of two moribund European companies which were on their metaphorical death beds. These are the Swedish multinational Ericsson and Finnish company Nokia.

The nine companies which sell 5G equipments are Altiostar, Cisco Systems, DatangTelecom/Fiberhome, Ericsson, Huawei, Nokia, Qualcomm, Samsung, and ZTE, of which three Chinese companies, Huawei, Datang and ZTE,  have been leading the race, given the cheaper and efficient products.

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But, the global backlash against China and reports of snooping by the People’s Liberation Army through these companies has done massive damage to Chinese 5G companies, especially Huawei.

The countries of the world, including the ones which have already awarded the 5G infrastructure rollout the project to Huawei like the United Kingdom, Canada, are now closing the doors for the company. The backlash against Huawei is coming from the governments (as in the case of United Kingdom), as well the telecom players themselves, like in Canada where two of the three major telecom companies announced that they would not deal with Huawei in their 5G rollout.

So, as these companies shut their doors for Chinese players which are Huawei, ZTE, and Datang, the only players left in the market are three American players- Altiostar, Cisco, and Qualcomm, two European players- Ericsson and Nokia, and one South Korean player- Samsung.

As Nokia and Ericsson have vast experience in the telecom market and were leading players in the rollout of 4G infrastructure, most of the telecom companies are awarding their 5G projects to them.

A few months ago, it looked like Nokia and Ericsson had no place in 80 billion per a year telecom equipment industry as they could not take on the highly efficient Chinese players like Huawei, but increasing protectionism, security concerns, and suspicion against China has sprung them back to the top.

The most recent setback for Huawei and cheer for Ericsson and Nokia came from Canada, where the telecom players ruled out collaboration with Huawei in 5G infrastructure.

The three major telecom players- Rogers Communication Telus Corporation, BCE Inc- have decided to award the 5G project to European companies with Rogers Communication going exclusively for Ericsson while Rogers and Telus awarding the project to Ericsson as well as Nokia.

This comes as a surprise because the Canadian companies were most ardent supporters of Huawei, and they among the first Western players to strike a deal with the Chinese giant back in 2008, when the company was relatively unknown to western markets.

“They were probably the most outspoken of the carriers in Canada in expressing their support for Huawei,” said Patrick Horan, a portfolio manager with Agilith Capital.

The primary reason behind the decision of Canadian players is probably the lure of American markets, where President Trump had made it crystal clear that any companies dealing with Huawei would not get to do business with America.

“[Bell] probably looked at their ability to garner any U.S. government telecom contracts with Huawei equipment in their [network]. My guess is that would be a negative for them,” said Horan.

Whatever be the reason behind the decision of Canadian companies, it would prove like a life-saving drug to the European 5G players which were on death bed.

Nokia and Ericsson have also pitched themselves as an alternative to Huawei for safe and secure 5G infrastructure in the United States. Given the fact US is the largest market in the world, even a part of the whole project would bring a large sum of revenue for Nokia and Ericsson.

In the United Kingdom, the government first capped Huawei’s share to 33 percent and now has decided to roll back the whole Huawei’s market share in next three years. With Huawei out of the market, a large chunk of revenue will go to European players. “it’s going to cost it £500 million ($660 million) to switch out Huawei, so a good chunk of that will now be going to Nokia and Ericsson,” analyst Matthew Howett of Assembly Research told AFP.

United States government has already told European countries to use Ericsson, Nokia, and Samsung products instead of Huawei, which many companies are expected to follow as they do not want to rage Trump administration, given the importance of American markets.

The stocks Ericsson and Nokia are trading in the green for the last few months, after years of constant decline, all thanks to Donald Trump and the sentiment against China and its companies after the outbreak of Coronavirus disease.

Tags: #USA5GCanadaChinaEricssonHuaweiNokiaTrumpXi Jinping
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