Deutsche Telekom to Review Purchases in Wake of Huawei Concern

(Bloomberg) -- Deutsche Telekom AG is re-evaluating its purchasing strategy amid growing security concerns surrounding Huawei Technologies Co., giving the first indication the German carrier may drop the Chinese company from its list of network suppliers.

Bonn-based Deutsche Telekom already has a multi-vendor approach, sourcing equipment not just from China’s Huawei, but also from Ericsson AB, Nokia Oyj and Cisco Systems Inc., it said in an emailed response to questions on Thursday.

“Nevertheless we are currently re-evaluating our procurement strategy,” the company said. “Deutsche Telekom takes the global discussion about the security of network elements from Chinese manufacturers very seriously.”

Western governments are worried that Huawei’s systems could be used by Chinese intelligence. Australia and New Zealand banned Huawei equipment from the planned 5G networks of carriers in the countries, and the head of British spy agency MI6 said last week the government needs to decide whether to ban the company.

Huawei has denied the charges and said it will do "anything" to convince governments it can be trusted to build the fifth-generation wireless networks. Concerns about the Chinese company’s global business have escalated since Chief Financial Officer Meng Wanzhou was arrested in Canada on allegations she conspired to defraud banks and violate U.S. sanctions on Iran. Meng was released on bail Tuesday but faces extradition to the U.S.

Deutsche Telekom is one of Huawei’s biggest European technology partners, having installed equipment from the Chinese company in thousands of its telephony towers. Huawei technology also forms the backbone of Deutsche Telekom cloud products, and it powers the carrier’s 5G networks in Berlin and Warsaw.

German officials have become uncomfortable with Huawei’s participation in 5G and have been reviewing the issue.

France’s government has been warning the industry about Huawei for some time, Orange SA Chief Executive Officer Stephane Richard said on Wednesday, adding that the French carrier is working with Ericsson and Nokia on current networks and new 5G systems, and not Huawei.

Two other French operators, Bouygues Telecom and Altice’s SFR, say they’ll look to directives from France’s National Agency for the Security of Information Systems on 5G suppliers.

©2018 Bloomberg L.P.