UK markets closed
  • FTSE 100

    +21.79 (+0.28%)
  • FTSE 250

    -83.94 (-0.44%)
  • AIM

    -2.19 (-0.29%)

    +0.0004 (+0.03%)

    +0.0014 (+0.11%)
  • Bitcoin GBP

    +114.81 (+0.28%)
  • CMC Crypto 200

    0.00 (0.00%)
  • S&P 500

    +1.77 (+0.03%)
  • DOW

    +62.43 (+0.16%)

    +0.08 (+0.10%)

    -3.60 (-0.18%)
  • NIKKEI 225

    +836.48 (+2.19%)

    -17.04 (-0.10%)
  • DAX

    +48.93 (+0.28%)
  • CAC 40

    +55.08 (+0.70%)

China's Huawei banned from UK 5G network

SHANGHAI, CHINA - JUNE 29, 2020 - Huawei's largest flagship store in the world, Shanghai, China
Huawei's largest flagship store in the world, in Shanghai, China. Photo: Costfoto/Barcroft Media via Getty Images

Britain has 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 on Tuesday announced 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.

READ MORE: Boris Johnson defies Trump to give Huawei 5G green light

“This has not been an easy decision but it is the right one for the UK’s telecoms networks, for our national security and our economy – both now and in the long run,” Dowden said in a statement to parliament.

UK telecoms companies will be banned from buying any new Huawei 5G equipment from the end of the year. Telecoms companies must also remove all Huawei equipment already installed in the network by 2027.

“The best way to secure our networks is for operators to stop using new affected Huawei equipment to build the UK’s future 5G network,” Dowden said.

“To be clear, from the end of this year telecoms operators must not buy any 5G equipment from Huawei and once the telecoms security bill is passed it will be illegal for them to do so.”

Digital, Culture, Media and Sport Secretary Oliver Dowden makes a statement to MPs in the House of Commons, London, that purchase of new 5G equipment from Chinese tech giant Huawei will be banned after December 31 and added that Huawei equipment already in the UK's 5G networks must be removed by 2027. (Photo by House of Commons/PA Images via Getty Images)
Digital, culture, media and sport secretary Oliver Dowden makes a statement to MPs in the House of Commons, London on Tuesday. Photo: House of Commons/PA via Getty

The announcement reverses 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.

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.

Dowden said the NCSC had “significantly changed their security assessment” of Huawei in light of the US sanctions, which could have a “severe impact” on Huawei’s ability to serve the UK.

“Clearly since January the situation has changed,” the digital and culture minister said.

The decision creates a headache for Huawei customers like Vodafone (VOD.L) and BT (BT-A.L). BT boss Philip Jansen warned this week it would take ten years to remove Huawei’s equipment from its network and could lead to service outages.

LONDON, UNITED KINGDOM - 2020/05/26: BT logo seen at Oxford Street. (Photo by Dave Rushen/SOPA Images/LightRocket via Getty Images)
BT logo. Photo: Dave Rushen/SOPA Images/LightRocket via Getty Images

Dowden admitted the ban would delay the launch of the UK’s 5G network by two to three years and add an estimated £2bn costs. He said the government had “not taken this decision lightly.”

“The security and resilience of our telecoms networks is of paramount importance,” he said. “We have never and will never compromise that security in pursuit of economic prosperity.”

The ban comes amid heightened tensions between the UK and China over a new security law imposed on Hong Kong. Britain has angered Beijing by offering Hong Kongers a path to citizenship in Britain in response to the law.

Dowden said in parliament: “Let me assure members that this government is clear-eyed about China. We have been robust in our response to the imposition of new security laws in Hong Kong.

The logo of Chinese company Huawei is seen on the screen of a Huawei mobile phone in London on July 14, 2020. - Britain on Tuesday ordered its telecom providers to stop purchasing 5G equipment from China's Huawei giant from the start of next year, and to strip out all of its equipment by 2027. (Photo by DANIEL LEAL-OLIVAS / AFP) (Photo by DANIEL LEAL-OLIVAS/AFP via Getty Images)
Huawei logo. Photo: Daniel Leal-Olivas/AFP

“What we want is a modern and mature relationship with China, based on mutual respect. Today’s decision, however, is about ensuring the long-term security of our networks.”

US intelligence services believe Shenzen-based Huawei may have links to the Chinese state and fear allowing it to work on national telecoms equipment could allow Beijing to spy on sensitive government communications.

The NCSC’s own assessment notes that Huawei could be “ordered to act in a way that is harmful to the UK” under Chinese law.

Even if Huawei is not working with the Chinese government, experts told Yahoo Finance UK its Chinese supply chain could be compromised. GCHQ said last year Huawei’s software was “shoddy,” adding to hacking risks.

READ MORE: US warns UK over 'momentous' Huawei decision

Rebel Tory MPs, including Iain Duncan Smith and Foreign Affairs Committee chair Tom Tugendhat, have repeatedly expressed concerns about Huawei’s role in UK telecoms networks.

Earlier on Tuesday Huawei’s UK chairman Lord Browne resigned after five years in the role. A spokesperson for Huawei said: “He has been central to our commitment here dating back 20 years, and we thank him for his valuable contribution.”