Huawei wins 60 per cent of China Mobile’s 5G network in show of confidence for beleaguered telecoms equipment maker

Huawei and ZTE together won roughly 90 per cent of 5G base station supply contracts for China Mobile and China Broadcasting Network despite US sanctions

Ericsson and Nokia were awarded small slivers of the network build-outs, signalling continuing challenges for foreign telecoms equipment suppliers in China

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A 5G cellphone tower is seen on a street in Beijing on April 7, 2020. Huawei and ZTE won the right to build the vast majority of new 5G towers for China Mobile and China Broadcasting Network, 400,000 of which will be built this year. Photo: AFP

Published: 7:29pm, 19 Jul 2021Updated: 11:09pm, 19 Jul 2021

Chinese telecoms equipment giant Huawei Technologies Co has secured the rights to build the lion’s share of 700-megahertz (MHz) 5G base stations for China Mobile, China’s largest telecoms operator, and the recently established China Broadcasting Network (CBN)

Huawei won out over rivals ZTE, Ericsson China and Nokia Shanghai Bell, despite quoting higher equipment prices than all of them. The company snapped up the majority of three different contracts for separate regions of China, taking 61 per cent, 59 per cent and 58 per cent, according to the results released by China Mobile on Sunday. The contracts could be worth as much as 38.35 billion yuan (US$6 billion) in revenue for Huawei.

China Mobile‘s willingness to spend more money on Huawei equipment shows how much the tech giant is still favoured by state-backed telecoms operators, despite the challenges it faces securing chips in the face of US sanctions. Fellow Shenzhen equipment maker ZTE, also hit by US sanctions, was awarded the second-largest portions, with 33.5 per cent, 30 per cent and 29 per cent of the contracts.

The results also reflect the difficulty foreign firms face as they try to make headway in China’s telecoms market, even as state officials in the country criticise the US for warning other countries over the use of Huawei hardware based on national security concerns.

Ericsson, which received 9.6 per cent of one of the China Mobile offers, has seen its sales plunge in the country, contributing to its first revenue decline in three years in the second quarter. Nokia Shanghai Bell, a joint venture, also secured about 10 per cent of one of the offers.

The vote of confidence in Huawei at home comes as the company faces mounting pressure overseas. US sanctions have cut it off from advanced semiconductors produced using US-origin technologies at overseas foundries. The US has been working to remove Huawei equipment from its networks, and several European governments are also doing the same or limiting access. Australia banned Huawei and ZTE 5G equipment in 2018.

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Under the new contracts, though, Huawei will be building nearly 60 per cent of 480,397 5G base stations, which will be shared between China Mobile and CBN, which was established last year. Of those, 400,000 are scheduled to be completed this year.