How much will the UK’s 5G ban on Huawei cost the country’s MNOs?

Published: 15 July 2020 - midnight

On Tuesday the 14th July 2020, the UK government took the unprecedented step of banning Huawei from its 5G mobile network infrastructure, just months after it had originally cleared the world’s biggest 5G network vendor to participate in the build out of the country’s 5G networks.

Despite significant lobbying from mobile network operators and businesses across the country, the UK government eventually caved to pressure from the US, and ruled that MNOs must begin phasing out their use of Huawei’s 5G equipment in their networks.

The UK’s Department of Digital, Culture Media and Sport (DCMS) has announced a revised set of proposals that will force MNOs to remove Huawei equipment from their 5G networks in the UK by the end of 2027. They will also be banned from buying new 5G network components from Huawei after the end of 2021. The DCMS will also consult on Huawei’s role in the country’s fixed line broadband and telecommunications sector, as it looks to forge ahead with its ambitious fibre to the home rollout, through multiple network expansions.

In the months leading up to the DCMS’ original decision to allow Huawei to continue its near 20 year association with British telcos, a number of high profile industry execs warned that banning Huawei from the UK’s 5G networks would cost hundreds of millions of pounds and would cost the UK its early leadership position on 5G in Europe.

With non-standalone 5G being built on top of existing 4G architecture, an immediate ban on Huawei would have meant that MNOs were forced to rip and replace existing elements of their 4G networks in order to conform to the 5G ban. However, by the time the 2027 deadline arrives, UK MNOs will expect to be fully transitioned to standalone 5G, including their own 5G cores.

In its financial guidance to the London Stock exchange, the UK’s biggest telco, BT, estimated the cost of phasing out Huawei equipment from its 5G network by 2027 to be around £500 million.

“BT currently estimates that full compliance with these revised proposals would require additional activity, both in removing and replacing Huawei equipment from BT’s existing mobile network, and in excluding Huawei from the 5G network that BT continues to build. However, now we have clarity on the timing, it is estimated that these costs can be absorbed within BT’s initial estimated implementation cost of £500m,” a BT spokesman said in a statement to the press.

Speaking before Tuesday’s decision to remove Huawei from the UK’s 5G networks, Vodafone UK’s head of networks, Andrea Dona, said that the company would need to spend “single figure billions” in order to rip and replace Huawei equipment from its networks.

Huawei also works extremely closely with the UK’s other mobile network operators, Three and O2, and while they have both remained tight lipped over the cost of replacing Huawei equipment from their respective 5G networks, it is fair to assume that both operators are looking at a bill at least in the low hundreds of millions of pounds mark.

The UK has set itself a number of lofty targets in terms of both mobile network coverage and fibre to the home fixed line penetration in the years to come. While the PR departments of the UK’s telcos and internet service providers go into overdrive to sell the idea that they can still deliver on these targets without the help of the world’s biggest 5G vendor, it remains to be seen whether or not they actually can. Much will hinge on the DCMS’ impending ruling on whether Huawei can continue its involvement in the country’s FTTH drive, with Prime Minister Boris Johnson stating on numerous occasions that the country would make full fibre broadband available to 100 per cent of its citizens by 2025. With current UK FTTH penetration levels hovering around the 10-11 per cent mark, Britain’s ISPs will certainly have their work cut out for them.

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