ZTE ban forces telecoms rethink
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 supply networks, industry sources say.
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 said.
“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 equipment.
“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.”
Perhaps the biggest setback was for Italian mobile operator Wind Tre, which had a €1bn 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 would use equipment from network supplier Ericsson instead, sources said.
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 with slowing growth, restructuring and big job cuts.
One industry expert said operators might start using multiple vendors to avoid being stuck with a supplier that came under trade sanctions.