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HAMBURG — Huawei Technologies is counting on a playing a significant role in the construction of next-generation 5G telecommunications networks in Germany, Europe’s biggest market, despite strong pressure from Washington for Berlin to exclude the Chinese equipment manufacturer.
Huawei has been working with Deutsche Telekom, Germany’s largest telecom operator, on 5G trials in Berlin since early this year. However, the company, of which the German government controls nearly a one-third stake, said on Dec. 13 that it was reevaluating its infrastructure suppliers amid the U.S. campaign to flag Huawei as a security risk.
“Deutsche Telekom takes the global discussion about the security of network elements from Chinese manufacturers very seriously,” a spokesman said.
Despite growing moves to exclude Huawei from 5G build-outs in developed countries including Japan and Australia, company officials are still upbeat about their prospects of participating in Deutsche Telekom’s network.
“We have been cooperating with Deutsche Telekom very successfully for many years and we are planning to continue doing so in the future,” said Huawei spokesman Patrick Berger.
He noted that Thomas Tschersich, head of internal security and cyber defense at Deutsche Telekom, had told a local interviewer earlier this month that the company had found no issues with Huawei equipment. “All network elements are thoroughly tested before being deployed,” Tschersich said.
Berger also noted that the 5G network Deutsche Telekom’s T-Mobile Polska unit launched Dec. 11 in central Warsaw runs on Huawei equipment.
On the other hand, Deutsche Telekom’s U.S. unit does not use Huawei equipment. And according to recent news reports, Deutsche Telekom offered to curb its global use of Huawei products as part of negotiations with Washington over the $26 billion merger of T-Mobile US unit and SoftBank Group-owned Sprint. The Committee on Foreign Investment in the United States and several other U.S. government agencies on Monday cleared the deal after months of talks with the companies.
Drawing a contrast with the U.S., German officials said in October said they had no legal basis to exclude Huawei and other Chinese companies from supplying networking equipment. However, the cabinet on Wednesday approved legal amendments that will expand the government’s powers to review and block foreign investments in the country, which could still have implications for Huawei or Chinese rival ZTE.
The changes will lower the threshold for government review of investments from non-EU companies in sensitive sectors to purchases of 10% of equity from 25%. The media industry will be added to the sectors covered by the law.
Some local media have reported that ZTE is in talks to build a 5G network for startup German telecom provider United Internet and then lease it to United. Network ownership is already identified as a sensitive sector under the foreign investment rules.
Mathias Brandes, a spokesman for United Internet, declined to confirm the talks with ZTE, but said, “We have conducted talks with all well-known providers, and talks on network planning, requirements and contract details have since been all but completed with two of them, [including] one from China.”
ZTE has already received bad news this month after the German arm of Spanish telecom operator Telefonica said it would not renew its network maintenance contract with the Chinese company. A Telefonica spokesman declined to clarify and ZTE did not respond to queries.
German officials and politicians have yet to publicly express concerns about Huawei and ZTE in the way that peers even in the U.K. have started to.
Asked by a local reporter about possible legal exclusion, Arne Schoenbohm, head of the Federal Office for Information Security, said, “For such serious decisions like a ban, you need proof” of the dangers. Schoenbohm also appeared last month at the inauguration of a new Huawei security lab in Bonn for German clients and officials to inspect its products.
Equipment from Huawei and ZTE is generally much cheaper than that from their European or South Korean competitors. Ruling party legislator Joachim Pfeiffer noted that network operators fear that excluding the Chinese companies could drive up network setup costs significantly.
“Germany should safeguard its independence in the rollout and do its utmost to maintain the technological capabilities that are necessary,” he said.
Analysts though see growing odds that the government will intervene. “The government is watching things much more closely now than in the past,” said Christian Schmidkonz, a professor of Asian-Pacific business studies at Munich Business School.
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