Ericsson China ambitions threatened by Huawei ban in Sweden By Reuters

© Reuters. FILE PHOTO: The Huawei logo is seen at the IFA Consumer Technology Fair, Berlin, Germany September 3, 2020. REUTERS / Michele Tantussi / File Photo

By Supantha Mukherjee

STOCKHOLM (Reuters) – An upcoming court ruling that will decide the future role Huawei can play in Sweden could also be a potential turning point for the ambitions of national champion Ericsson (BS 🙂 in China.

The case stems from the latest decision by the Swedish government October to ban Huawei from supplying 5G equipment for security reasons. Huawei has filed a lawsuit to overturn the decision and a verdict is expected in the coming weeks.

European governments have tightened controls on Chinese companies building 5G networks following diplomatic pressure from Washington, which alleges Huawei equipment could be used by Beijing for espionage. Huawei has repeatedly denied being a national security risk.

China previously asked Sweden to “immediately correct the error” of banning Huawei and issued a veiled warning this month indicating that he could take retaliatory action against Ericsson.

The Global Times, controlled by the ruling Communist Party in China, said on May 10 that if Ericsson was invited to participate in equipment tests 5G in China, that doesn’t mean he will be hired. Sweden needs to carefully reconsider its Chinese policy, the newspaper said.

A spokeswoman for Ericsson confirmed that the company has been invited to participate in 5G testing in China. Ericsson won 5G contracts from China’s three major carriers last year, and the country generates around 10% of its revenue.

Analysts have signaled the risk of retaliation from China and Ericsson chief executive Börje Ekholm has acknowledged the concern.

“There is always a risk that we will be impacted in auctions in different countries,” he said last month, responding to a question about diplomatic tensions between Sweden and China.

He previously criticized Sweden’s ban on Huawei for restricting free competition.

An Ericsson spokesperson declined to comment further.

“It’s kind of a test of Sweden’s credibility and we believe we will be treated fairly in court,” said Kenneth Fredriksen, Huawei executive vice president for Central Europe and the Nordic region.

A potential ban from Ericsson could be a boost for Nokia (NYSE :), which has yet to win any 5G activity in China.

“We haven’t made a breakthrough in 5G in China yet, but of course we are not ruling out that possibility for the future,” Nokia CEO Pekka Lundmark told Reuters last month.

Nokia’s home country of Finland has not completely banned Huawei, although its parliament has passed a law allowing it to ban the equipment on national security grounds.

A Nokia spokesperson said the company has already completed 5G testing in China.

China has led other countries in the rollout of 5G and is a lucrative market for telecom equipment manufacturers. Its capital spending on 5G will amount to $ 223 billion between 2019 and 2025, research firm EY estimated / topics / tmt / ey-china -is-ready-to-win-the-race-5g-en.pdf? Download.

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