UK Huawei 5G ban hammers top line

·2 min read
This photo taken on May 31, 2021 shows a Huawei logo at the flagship store in Shenzhen, in China's southern Guangdong province. - China OUT (Photo by STR / AFP) / China OUT (Photo by STR/AFP via Getty Images)
Huawei's margins were seriously affected in the UK when the government blocked its involvement in the country's 5G network. Photo: STR/AFP via Getty Images

Huawei's UK operation saw its turnover plummet 27.5% in 2020 to £913m ($1.28bn), as top lines were hit by Britain's decision to ban the company from providing 5G infrastructure for its mobile network.

Operating profit was down by a quarter to £36.4m before tax, despite a £26m reduction in costs during that period due to reduced employee and travel expenses.

In July 2020, Britain banned Huawei from its 5G network, reversing an earlier decision to allow the Chinese company to work on the critical telecoms infrastructure.

The UK’s digital and culture secretary Oliver Dowden announced at the time an “irreversible path for the complete removal of Huawei equipment from our 5G networks” and said the Chinese company’s role in historic networks would also be reviewed.

Dowden admitted the move would set back efforts to establish 5G in Britain by up to three years and cost the telecoms industry billions. However, he defended the move by citing national security concerns.

The announcement reversed an earlier decision to limit Huawei to 35% market share in UK 5G. Boris Johnson approved the limited role for Huawei in January, flying in the face of sustained pressure from the US. Donald Trump and US secretary of state Mike Pompeo had repeatedly pressed the UK to follow the likes of Australia in banning Huawei.

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The UK’s National Cyber Security Centre (NCSC) initially approved a limited role but launched a new review in May after the US imposed fresh sanctions on Huawei.

Huawei has been a target of former US president Donald Trump's trade war with China, despite being one of the biggest providers of smartphones and kit for telecoms networks.

The decision to ban Huawei has allowed companies such as Vodafone (VOD.L) and BT to fill the gap in the market in the UK.

A Huawei spokesperson said: “Political decisions have not only had a real impact on our UK business, the people we employ, and our customers, they will delay the 5G roll-out and put Britain into the digital slow lane.

"Huawei’s global business has shown resilience and our priority in the UK remains working with our customers and partners to make sure the country's networks remain reliable, as we have always done."

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