Vodafone, Orange face 5G rip-and-replace as Romania bans Huawei

Romania's telcos have been enthusiastic buyers of Chinese electronics. Of the country's four operators, both Orange and Vodafone became wholly reliant on Chinese vendors for their radio access network (RAN) gear in the 4G era, according to data published by Strand Consult, a Danish analyst firm. Vodafone reportedly launched its first 5G services in 2019. Orange has also introduced them. An Opensignal report dated July 2023 put Vodafone's 5G "availability" – a measure of the time people have on a network connection "in the places they most commonly frequent" – at 10.6%. For Orange, 5G availability was 13.2%.

But after legislative developments this week, 5G equipment will have to be ripped out. Following the adoption of a 5G security law in June 2021, the government has imposed a formal 5G ban on Huawei, China's biggest telecom equipment vendor, turning down its request to sell 5G products.

"We are disappointed with the government's decision, which is not rooted in any objective assessment or actual findings," said Huawei in a statement, insisting it has complied with all national rules and regulations. ZTE, a smaller Chinese vendor with stronger links to China's government, seems unlikely to be any more acceptable to Romanian authorities henceforth.

Even if 5G equipment has not been widely deployed, the government decision could necessitate a major swap-out of Romania's telecom infrastructure. In the RAN, operators have tended to buy 4G and 5G products from the same kit vendor for commercial and technical reasons. With the so-called "single RAN," the same hardware platform hosts both technologies. A 5G ban in the UK has forced telcos there to ditch Huawei's 4G technology as well.

Romanian telcos will, nevertheless, have several years to complete the switch. As noted by Vodafone in its 2022 annual report, the Romanian security law that affects Huawei gives operators five years to replace it in the core – the software-based control center of the network – and seven years to change it in the RAN. John Strand, the CEO of Strand Consult, says that means deadlines of 2026 for the core and 2028 for the RAN.

Another geopolitical boost for Huawei rivals

Vodafone seemed to realize the Huawei game was up even before this week's news broke, unveiling Ericsson and Samsung as new 5G vendors in advance of the Mobile World Congress show in Barcelona. Ericsson will equip 80% of urban sites, with Samsung addressing the other 20%.

In its statement on the deal, Samsung confirmed it will provide not just 5G but other mobile generations, implying Huawei will be completely removed from these sites. Its eviction seems likely at future Ericsson 5G sites, too, although the Swedish company referred only to the latest generation in its own release. As for rural areas where Vodafone shares its network with Orange, a separate tender is planned. However, trials of Samsung equipment have already taken place.

Orange has had less to say about its future network plans in the country. "Orange Romania uses equipment produced by several suppliers, including Huawei, in its network," said the operator in a statement issued in response to the latest developments. "According to the requirements of the 5G law, Orange will replace the equipment produced by non-certified 5G suppliers within the given terms, namely seven years since the law for equipment belong to the radio access network was published, and five years from the publishing of the law for equipment belonging to the core network."

This is evidently bad news for Huawei, which seems to be under growing pressure in various European markets. Nokia is replacing it across 3,000 sites operated by Deutsche Telekom in Germany, said Tommi Uitto, the head of the Finnish vendor's mobile business group, during an interview with Light Reading at MWC. Last year, German officials proposed an official ban on what they call high-risk vendors.

Requesting anonymity, a senior executive at another big European telco said Huawei's long-standing aversion to the concepts of open and cloud RAN – which puts software on general-purpose equipment – has prompted his company to explore alternatives. Heavily reliant on Huawei throughout the European region, Vodafone has launched a 100,000-site tender. Its stated goal is to have open RAN deployed across 30% of its footprint by 2030.

"This decision will harm our business operations in the country, and as well have a far-reaching negative impact on the ecosystem of local ICT industry and business operations of our partners," said Huawei in its statement. Today, it employs 1,300 people in Romania, it pointed out. But if another market is any guide, the number will fall dramatically: Huawei has cut back heavily in the UK since the government began imposing restrictions.

It is still unclear whether operators could face sanctions for buying unauthorized equipment. Developments suggest they may have done so after the 5G security law was introduced, hoping subsequent applications by Chinese kit vendors would succeed. Stripping it out by those deadlines while ensuring Romanians stay connected may be punishment enough.