Sat, Aug 15, 2020 page10

• Huawei, ZTE to be shut out of India’s 5G trials

  BORDER CLASHES: India is expected to announce a ban on the two Chinese firms in line with new rules restricting bidding from nations that share a border with it

  • Bloomberg
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  China’s Huawei Technologies Co (華為) and ZTE Corp (中興) are to be kept out of India’s plans to roll out its 5G networks as relations between the two countries hit a four-decade low following deadly border clashes.

  The South Asian nation would apply investment rules amended on July 23 that cite national security concerns to restrict bidders from nations it shares land borders with to keep out the companies, people familiar with the issue said, asking not to be identified, citing rules for speaking with the media.

  The Indian Ministry of Communications is to restart pending discussions on approvals for 5G trials by private companies, including Bharti Airtel Ltd, Reliance Jio Infocomm Ltd and Vodafone Idea Ltd that were delayed by the nationwide lockdown, they said.

  

  Huawei Technologies Co’s flagship store in Shanghai, China, is pictured on Thursday.

  Photo: EPA-EFE

  India’s decision echoes actions by the US, UK and Australia, which have raised red flags about the companies’ Chinese government links.

  The US Federal Communications Commission has officially declared both companies national security threats.

  The process to auction 5G may spill into next year, the officials said.

  A decision on the ban is expected to be announced in a week or two after approval from the prime minister’s office, they said.

  While India allowed Huawei to participate in its 5G trials earlier this year, its stance against Chinese companies hardened after Beijing’s actions along their disputed border in early May. That military standoff, which turned deadly in June, killing 20 Indian soldiers and an unknown number of Chinese troops, is now in its fourth month.

  In late June, India banned ByteDance Ltd’s viral short-video service TikTok and dozens of other Chinese apps, citing threats to its sovereignty and security.

  “Telecom infrastructure has become part of national security assets and nations are looking at controlling and regulating them just like they do power and water,” said Nikhil Batra, Sydney-based analyst at International Data Corp (IDC).

  “But the Indian market is already battling infrastructure and regulatory problems. The network equipment market is a small one. So India’s challenges will compound from such a decision,” Batra said.

  Telecom companies were expected to invest US$4 billion in setting up 5G infrastructure, according to IDC estimates.

  That could be tough as companies, including Bharti, Vodafone Group PLC and even state-run firms, continue to struggle to make existing 4G networks profitable.

  There is already heavy reliance on Chinese equipment in its 4G networks, and shutting doors to Huawei and ZTE could increase costs of a switch to 5G by as much as 35 percent, SBICAP Securities Ltd research head Rajiv Sharma said.

  Reliance could be a serious challenge to Huawei in the world’s second-biggest wireless market after Indian billionaire Mukesh Ambani on July 15 announced plans to soon roll out a 5G network for his Jio Infocomm using a technology developed in-house, without giving details.

  Yet, with its economy headed for a “deep slump” amid a worsening COVID-19 pandemic, the government might not be in a position to push for a 5G spectrum auction in the near future.
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