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Huawei is still winning 5G contracts around the world despite the U.S. ban

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Countries around the world are still awarding Huawei contracts to develop 5G networks, despite repeated warnings and pressure from the U.S to ban the equipment maker.

The Chinese telecom giant has won more than 18 new 5G commercial contracts in the past five months, half of which come from Europe, according to data Yahoo Finance compiled from Huawei announcements. With 40 commercial contracts in total, Huawei is leading 5G installations worldwide.

None of Huawei’s 40 5G commercial contracts come from its home turf, mainland China (Huawei has one contract from Hong Kong). Surprisingly, China’s top carrier, China Mobile, handed over a 1 billion euros ($1.17 billion) contract to Finnish telecom company Nokia last year. Nokia has scored 34 5G contracts so far. Ericsson, the other leading telecom equipment maker, has won 18 commercial contracts globally, including the U.S. and Australia markets, where Huawei has been banned by governments.

Chi Lo, senior economist at PNB Paribas, thinks Europeans are more practical. “If you look at the tech area, they are much more intertwined with the Chinese Huawei and 5G technology. If they shut out Huawei, they'll probably shut themselves out of the 5G market for at least two or three years. Obviously the governments there are considering how to make a choice of that.”

Huawei is winning more 5G contracts.
Huawei is winning more 5G contracts. (David Foster)

Huawei’s growth in 5G is against the backdrop of a U.S. campaign to limit the role of Chinese telecommunication firms in the build-out of 5G networks, citing national security concerns. Some European countries, including the UK, have vowed to tighten security on Huawei products to make sure there are no security vulnerabilities. German intelligence even said Huawei isn’t a trustworthy partner to build the country’s fifth-generation mobile networks, although Chancellor Angela Merkel decided not to ban Huawei from bidding for 5G contracts. The U.S. will continue to push its allies to adopt shared security policies that will limit their partnership with Huawei in a meeting next month, according to Reuters.

Benefits outweigh the risks

To some countries, the ability to get one of the best next-generation technologies at a cheaper price outweighs the potential risks. A government minister in Poland told Reuters that the Eastern European country may not be able to exclude all Huawei equipment from its 5G mobile networks as it previously pledged, due to cost concerns. That shift in attitude followed the arrest of a Huawei executive in Poland on charges of spying for China in January. It also reflects a growing dilemma that many countries face when having to choose partners to keep up-to-date in the 5G game.

In its latest analyst meeting, Huawei said it is optimistic about further expanding its 5G dominance.

“We have voluntarily given up the U.S. market. We are still participating in Australia's 4G expansion,” Wang Tao, Huawei's executive director, said on Tuesday. “Although we are under pressure from geopolitical restrictions, we believe that carriers in each country will make wise choices. In 2019, Huawei will not face great changes or deterioration in terms of operating areas.”

Krystal Hu covers technology and China for Yahoo Finance. Write to her via krystalh@yahoofinance.com

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