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UK plan to cultivate Huawei rival is “ludicrous”, says analyst

The British government’s leaked plan to invest in telecoms equipment in an attempt to cultivate a rival to China’s Huawei is ludicrous, a leading telecoms expert has warned.

It emerged over the weekend that the government is drawing up plans to invest in domestic telecoms companies to help them develop the equipment needed to build 5G networks without relying on foreign firms such as Huawei.

According to the plans, first reported by the Times, the government is also seeking to work with international partners, including the US, South Korea and India, to develop a broader range of telecom equipment suppliers.

The move comes as the government is taking steps to abandon plans to let Huawei play a limited role in Britain’s 5G networks, amid increasing pressure from backbench Tory MPs and the Trump administration.

It has commissioned the National Cyber Security Centre to investigate the impact of new US trade sanctions on the security of Huawei’s equipment, potentially clearing the way for tighter restrictions on the Chinese firm.

But John Byrne, a telecoms analyst at GlobalData (part of the same group as NS Tech) warned that the idea of creating a rival to Huawei is “fairly ludicrous”, adding: “The R&D required to develop a new competitor would be prohibitive and frankly the margins are quite thin even with the relatively small group of vendors right now that are dominated by Huawei, Ericsson and Nokia.”

But Byrne also cast doubt on fears in government that Huawei, in the event it is banned from providing 5G kit, might retaliate by pulling existing support for the 3 and 4G networks. “The networks are bought and paid for, and operated by, the UK operators so in the near term there would be no impact but it would usher in a scramble to move off of these networks,” he told NS Tech.

“However, this would be the “nuclear option” – obviously it would be devastating but it is also extremely unlikely. China has lots of other levers to pull in a trade war.”

Victor Zhang, vice-president of Huawei, said in a statement: “As a private company, 100 per cent owned by employees, which has operated in the UK for 20 years, our priority has been to help mobile and broadband companies keep Britain connected, which in this current health crisis has been more vital than ever. This is our proven track-record.”