Ericsson Stockpiles to Supply BT, Rivals After Huawei 5G Ban

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Ericsson AB is stockpiling equipment ahead of Brexit to ensure it can meet growing demand from Britain’s next-generation wireless networks, the Swedish vendor said, alongside announcing a contract to supply antennas to the U.K.’s biggest phone company BT Group Plc.

“We’re now obviously supplying the four operators in the U.K., so we can’t take so many chances,” said John Griffin, Ericsson’s Chief Executive Officer in the U.K. and Ireland, in an interview, referring to BT, Vodafone Group Plc, Telefonica SA’s O2 and CK Hutchison Holdings Ltd’s Three UK.

“In each case we’ve actually sat down and agreed with everyone around what is needed and what’s not needed,” said Griffin. “We’re currently doing that with BT.”

Ericsson will supply BT’s antennas in the U.K.’s major cities. The announcement follows the U.K. ban of China’s Huawei Technologies Ltd for 5G in July. Ericsson will hold an extra four-to-six weeks’ worth of equipment at a stock facility in Nottingham, ahead of the ban coming into effect at the end of the year.

Ericsson’s deliveries come from Dusseldorf in Germany and arrive at Britain’s largest lorry terminal in Dover, though there are contingency plans if that port is disrupted, Griffin said. The U.K. government’s own “reasonable worst case” Brexit scenario warns of truck queues 7,000 long from the port if traders aren’t ready for border controls.

Ericsson’s deal with BT follows another with Three UK in August, as Britain’s mobile carriers shift away from Huawei. The Shenzhen tech giant was previously set to play a leading role, but the U.K. designated it a high risk and said U.S. sanctions applied in May made it impossible to verify the security of its supply chain. The U.S. says Huawei is a risk because it’s under the sway of the Chinese state, which Huawei denies. Ericsson is also replacing Huawei in BT’s 5G core.

In January, BT said it would cost 500 million pounds ($652 million) extra to comply with restrictions on Huawei, which previously made up about two thirds of the 4G mobile network that underpins the first version of 5G. Most of the rest comes from Finland’s Nokia Oyj, which also recently inked an expanded 5G contract with BT. This contract fits within that cost estimate, said BT’s chief network architect Neil McRae in an interview.

“With everything that’s gone on, it’s hard to see how Huawei continues in our network,” said McRae. “We are on a path that will see us remove Huawei entirely in the mobile network over the next few years.”

©2020 Bloomberg L.P.

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