Telcos rethink biz plan after ZTE ban

Operators may start using multiple vendors to avoid being stuck: Expert

London, July 17: The US trade ban on Chinese telecom equipment maker ZTE wreaked havoc at wireless carriers in Europe and South Asia and forced operators worldwide to consider broadening their supply networks, industry sources told Reuters.

Disruptions at Russian and emerging markets mobile operator Veon, one of the world’s 10 largest mobile firms by number of customers, illustrate the effects of the US ban, which lasted three months, ending when the US Commerce Department lifted the order on Friday.

Veon was especially hard hit, suffering launch delays at its Italian joint venture and in Ukraine, near network outages in Bangladesh, and lesser disruptions at its Pakistan operations, sources at the Amsterdam-based operator told Reuters.

“Veon has decided to second source everything,” a person familiar with the strategy shift at Veon said of moves to reduce dependence on any one supplier of network gear.

“We don’t want the company to be in the same position we were in when the US (ban on ZTE) came out: It caused massive problems in three or four of our markets,” the source said.

Perhaps the biggest setback was for Italian mobile operator Wind Tre, which had a 1 billion euro ($1.17 billion) contract with ZTE to upgrade radio equipment.

The ban forced ZTE to abandon more than half of the remainder of the contract, and Wind Tre will use gear from network supplier Ericsson instead, sources told Reuters.

The original deal had marked ZTE’s biggest breakthrough into the European market, which has been dominated by regional players such as Ericsson of Sweden and Nokia of Finland.

Ericsson’s win with Wind Tre could be a sign of renewed momentum for the Swedish equipment supplier, which has struggled in recent years with slowing growth, restructuring and big job cuts.

One industry expert said operators may start using multiple vendors to avoid being stuck with a supplier that comes under trade sanctions or suffers other extended disruptions.

“Many supplier strategies will be reviewed,” said Bengt Nordstrom, a telecoms industry consultant based in Sweden who advises operators on equipment purchasing strategies.