Europe is dropping Huawei amid growing security concerns

For months, the United States (U.S.) has been pushing governments to block Huawei Technologies Co. from telecom networks with the concern that China’s government could use Huawei’s equipment for spying. Espionage concerns with Huawei, run by a former military engineer, are not new but the company has always maintained that it’s independent and doesn’t give the government access to its equipment. European officials and companies were initially slow to act on the U.S. warnings but are now increasingly distancing themselves publicly from Huawei.

CEO of telecom consultant Northstream Bengt Nordstrom said the continent’s biggest carriers will now be “extra cautious” of buying equipment from Huawei and “It’s been a week of negative announcements and indications from the biggest markets in Europe -- the U.K., Germany and France.” Telecom, media, and technology analyst at Mirabaud Securities Ltd. Neil Campling said, “Reputational damage for Huawei will be significant whatever the outcome. It seems likely that Huawei will lose significant share in the next three years.”

The development of 5G, which will boost speeds and reduce the latency of connections to bring online a wave of new gadgets, from devices in cars to manufacturing facilities, has security and government officials worried that networks carrying sensitive data will be at greater risk of hacking.

We recognize the concerns about security with the introduction of new 5G networks, and those are concerns we share,” said Vincent Pang, the president of Huawei Western Europe, in a statement. “We think the answer lies in global cooperation and collaboration to ensure that networks are as secure as possible.”

As a member of the Five Eyes intelligence alliance, the United Kingdom (U.K.) was the first major market in Europe to publicly raise doubts about the security of Huawei’s equipment in the run-up to 5G. The head of Britain’s spy agency MI6 said last week that the government needs to decide whether to allow Huawei as a 5G supplier. BT Group Plc pledged to rip out some of the company’s equipment.

France is pushing for significantly tighter regulation and has safeguards in place for critical parts of its telecom networks. The country is now considering adding items to its ‘high-alert’ list that tacitly targets Huawei and France’s National Agency for the Security of Information Systems (Anssi) is demanding full access to potential suppliers’ technology. Huawei hasn’t submitted its equipment for vetting to become certified for critical components, and Orange SA said it won’t use Huawei gear to build fifth-generation wireless networks.

In Germany, officials have become uncomfortable with Huawei’s participation in 5G and have been reviewing the issue. Last week Deutsche Telekom AG raised the prospect of dropping Huawei, followed by the Norwegian government saying they are weighing concerns with using suppliers from countries with which there’s no security policy cooperation, an explicit reference to China.

The developments in Europe come after bans of Huawei equipment in Japan, Australia, New Zealand, and the U.S. and follow the arrest of its Chief Financial Officer (CFO) Meng Wanzhou, the 46-year-old daughter of founder Ren Zhengfei.  Ms. Meng is accused by the U.S. of defrauding banks to mask violations of sanctions on sales to Iran, and after being arrest in Vancouver last week was granted bail by a Canadian court and she now awaits a possible extradition to the U.S.