4.2500 -0.08 (-1.85%)
Pre-market: 8:53AM EST
|Bid||4.2200 x 317000|
|Ask||4.2300 x 28000|
|Day's range||4.2800 - 4.3300|
|52-week range||3.3300 - 6.4200|
|Beta (5Y monthly)||-0.01|
|PE ratio (TTM)||N/A|
|Forward dividend & yield||0.22 (5.18%)|
|Ex-dividend date||28 Jul 2019|
|1y target est||4.84|
(Bloomberg) -- With the U.S. campaign against Huawei Technologies Co. threatening to disrupt the rollout of 5G wireless networks, phone carriers are joining forces to develop technology that can reduce their reliance on a handful of powerful equipment suppliers.The Chinese company dominates the European market for telecommunications gear, ahead of Ericsson AB of Sweden and Finland’s Nokia Oyj. Governments are weighing whether to follow the U.K. and limit Huawei’s share of 5G networks over concerns -- denied by the company -- that it represents a security risk.If they do, it could knock the progress of 5G off course: The big three have designed a lot of their wireless gear so it can’t easily be integrated in the same network, much like an electric toothbrush only works with its own brush heads. So building 5G with Nokia or Ericsson kit on top of Huawei 4G infrastructure is fraught with complexity and costs.Companies including Deutsche Telekom AG and Vodafone Group Plc have decided to combine separate projects to develop a more standardized, flexible network architecture that would make it easier for carriers to use products from multiple vendors, according to people familiar with the matter.Under the plans, the O-RAN industry alliance, backed by Deutsche Telekom and AT&T Inc. among others, will align its work with the Telecom Infra Project, which was started by Facebook Inc. and is supported by several phone companies, said the people, who asked not to be named as the plans aren’t yet public.The industry is pursuing the efforts with greater urgency partly because they’re alarmed by the prospect of restrictions on Huawei in more markets such as Germany, one of the people said. The U.K.’s decision to limit Huawei’s share of broadband infrastructure already led BT Group Plc to predict a 500 million-pound ($650 million) hit to its finances.The carriers were planning to announce the O-RAN/TIP initiative at the wireless industry’s biggest annual showcase in Barcelona next week, before it was canceled due to the coronavirus outbreak, the people said. An announcement could instead come as early as this week.O-RAN’s goal from the start has been to “invite in more players with new ideas to help make the network stronger and more secure,” said Deutsche Telekom spokeswoman Pia Habel. She declined further comment.A spokeswoman for TIP declined to comment. A representative for O-RAN could not immediately be reached for comment.Negotiating PowerEnsuring that antennas, switches and other gear from competing suppliers can communicate seamlessly may also make it harder for any vendor -- Ericsson and Nokia included -- to clinch contracts just because the customer already uses its equipment. That could strengthen the negotiating position of carriers in contracts for 5G networks that are set to cost the industry hundreds of billions of dollars.AT&T has said it wants to replace the proprietary software that Nokia, Ericsson and Huawei use to run their wireless network gear with an open software.Vodafone has begun issuing small contracts for OpenRAN, an initiative backed by TIP to standardize radio access network hardware and software. CEO Nick Read said in October that Vodafone was “ready to fast track it into Europe as we seek to actively expand our vendor ecosystem.”O-RAN began in 2018 as a lobbying and research effort to make the radio access network -- the largest part of a wireless system -- more transparent and inter-operable. TIP is a broader project involving hundreds of companies working across all elements of networks.O-RAN and TIP may already be changing the economics of the industry and giving newer players more room. It’s now possible to design a “virtual” wireless network, which uses standardized, open-source software in conjunction with hardware from different vendors.Rakuten Inc. is using such technology to roll out a virtual network in Japan. U.S. satellite broadcaster Dish Network Corp., a member of the O-RAN alliance, aims to build a 5G network along similar lines.Ericsson and Nokia, reluctant to pick a fight with their biggest customers, have publicly welcomed O-RAN and TIP. Ericsson has joined O-RAN, while Nokia supports TIP and has been helping Rakuten build the Japanese network.Nokia Chief Executive Officer Rajeev Suri said in April last year it’s “better to be involved than not,” although he didn’t expect the model to be replicated in other parts of the world.\--With assistance from Thomas Seal, Angelina Rascouet, Niclas Rolander and Scott Moritz.To contact the reporters on this story: Stefan Nicola in Berlin at firstname.lastname@example.org;Rodrigo Orihuela in Madrid at email@example.com;Natalia Drozdiak in Brussels at firstname.lastname@example.orgTo contact the editors responsible for this story: Thomas Pfeiffer at email@example.com, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
T-Mobile (TMUS)-Sprint (S) merger approval will likely pave the way for faster 5G rollout across the country. Qualcomm (QCOM) reports solid first-quarter fiscal 2020 results driven by 5G chip strength.
(Bloomberg) -- The wireless industry scrapped its biggest annual showcase after the coronavirus outbreak sparked an exodus of participants, roiling telecom companies just as they’re preparing to roll out new 5G services.It’s the first time in MWC Barcelona’s 33-year history that organizers have called off the event, which draws more than 100,000 participants from across the world to check out the latest innovations, pitch to investors and do deals.“The global concern regarding the coronavirus outbreak, travel concern and other circumstances, make it impossible” to hold the event, John Hoffman, chief executive officer of conference organizer GSMA, said in a statement to Bloomberg News.The list of big-name attendees started to crumble on Feb. 7, when Swedish wireless equipment maker Ericsson AB pulled out, saying it couldn’t ensure the safety of staff and customers. As others pulled the plug -- from Sony Corp. to Nokia Oyj, Vodafone Group Plc and Deutsche Telekom AG -- it became harder for those remaining to justify their presence.Bloomberg News reported earlier that GSMA could announce the cancellation as soon as Wednesday, after a meeting of members. As of Tuesday, the death toll in China from the virus rose to 1,113, and confirmed cases on the mainland have reached 44,653.MWC was due to run from Feb. 24 to Feb. 27. GSMA had stepped up sanitary precautions to reassure visitors -- advising against handshakes, introducing body temperature scanners and a protocol for changing microphones, and restricting entry to recent arrivals from China. Some delegations had replaced Chinese staff with colleagues from other countries or sent their China representatives ahead of time to avoid being barred.Who’ll Pay?Every year, telecom heavyweights use MWC and the oceans of publicity that come with it to generate marketing buzz around their latest wares. A big focus this year was going to be fifth-generation mobile services, and now several companies will need to reschedule launch events. Chipmaking giant Intel had planned to announce products for 5G networks and will hold an unveiling another time, according to a person familiar with its plans. Motorola was gearing up to showcase new 5G phones.The smartphone industry is trying to fire up stalled growth with the promise of higher data speeds and faster responsiveness. Smartphone shipments have been declining since 2016.The decision to scrap MWC entirely was a difficult one, and it’s not clear who will shoulder the costs -- the participants or GSMA. The industry’s biggest players often spend tens of millions of dollars to exhibit at the show. Ericsson’s absence alone left a gap bigger than a standard American football field in the conference halls.GSMA funds much of its budget from the event, charging 799 euros ($872) for a basic admissions pass.BarcelonaMWC is also important to the city of Barcelona, Spain’s second-largest city, as well as to many of the smaller companies that wouldn’t otherwise have access to such a large audience of mobile carriers and consumers. Large national contingents from Turkey to South Korea take to the show to encourage deal-making and inward investment.The regional government of Catalonia had been in touch with the conference organizers and said it saw no need to cancel events like MWC, Alba Verges, head of the Catalan government health department, said at a press conference in Barcelona.South Korea’s LG Electronics Inc. was among the first to rethink its participation, pointing out last week that most health experts had advised against “needlessly” exposing hundreds of employees to international travel.The global spread of the coronavirus has decimated other conferences, like Singapore’s annual airshow, which lost scores of corporate attendees but went ahead as planned on a smaller scale. Formula One confirmed it is postponing this year’s Chinese Grand Prix racing event due to the coronavirus outbreak, the Liberty Media Corp.-owned firm said in a Twitter post on Wednesday.(Updates with information on abandoned product launches by Intel and Motorola in seventh paragraph.)\--With assistance from Thomas Seal, Niveditha Ravi, Saritha Rai, Debby Wu, Ian King, Gao Yuan, Mark Gurman, Scott Moritz, Rodrigo Orihuela, Angelina Rascouet and Loni Prinsloo.To contact the reporter on this story: Nate Lanxon in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Rob GolumFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- After some of the biggest telecom companies withdrew from the wireless industry’s top annual event because of concerns about the spread of the coronavirus, MWC Barcelona 2020 is all but dead.Members of the organizer, the GSMA, headed into a meeting on Wednesday expecting to announce a decision to cancel the conference in the afternoon, according to people familiar with the matter. However, the group based in London has been unable to arrive quickly at a conclusion on what to do.While many members of the lobby group publicly said they would withdraw, the organization’s base is broad and global. It’s not clear who would carry the costs of choosing not to go ahead. The Catalonian health authority said Wednesday it saw no need for such an event to be canceled.Spanish radio station Cadena Ser reported that GSMA has decided to continue preparations for MWC at least until Friday while it monitors the evolution of the virus.Two of the world’s biggest phone carriers -- Deutsche Telekom AG and Vodafone Group Plc -- earlier on Wednesday joined major exhibitors such as Nokia Oyj, Ericsson AB and Sony Corp. in pulling out of MWC. Ericsson’s absence alone left a gap bigger than a standard American football field in the conference halls.A decision to abandon the gathering for the first time in its 33-year history would underscore how the continued spread of the virus from its origin in China is denting business activity around the world. The death toll in China rose to 1,113 as of Feb. 11, and confirmed cases on the mainland have reached 44,653.Liberty Media Corp.’s Formula One on Wednesday postponed the Chinese Grand Prix, due to be held in April. Scores of companies and VIPs have pulled out of the Singapore Airshow, the industry’s biggest in Asia, scheduled for this week.MWC is due to run from Feb. 24 to Feb. 27, drawing around 100,000 people to the Spanish city. It’s the industry’s most important opportunity for networking and a chance to show off the latest gadgets and software to buyers from across the world. Wireless equipment vendors use MWC to hammer out deals with their biggest customers. Were the event to go ahead, it would be a shadow of its former self.5G ShowcaseThe GSMA stepped up sanitary precautions in recent days to reassure visitors -- advising against handshakes, introducing body temperature scanners and a protocol for changing microphones, and restricting entry to recent arrivals from China.That’s not been enough to reassure many participants given the potential for virus transmission at an event where thousands of visitors jostle through packed exhibition halls and huddle in meeting rooms.In a statement to Bloomberg, the GSMA said Wednesday it was meeting regularly with health experts and partners “to ensure the wellbeing of attendees,” and will continue to seek medical advice on a frequent basis. A representative for the industry body declined to comment further.The biggest MWC participants often spend tens of millions of dollars to exhibit at the show. The GSMA funds much of its budget from the event, charging 799 euros ($872) for a basic admissions pass.This year is supposed to see the big launch for fifth-generation mobile services that debuted in 2019. The smartphone industry is trying to fire up stalled growth with the promise of higher data speeds and faster responsiveness. Smartphone shipments have been declining since 2016.MWC is also important to the city of Barcelona, as well as to many of the smaller companies that wouldn’t otherwise have access to such a large audience of mobile carriers and consumers. Large national contingents from Turkey to South Korea take to the show to encourage deal-making and inward investment.\--With assistance from Stefan Nicola, Angelina Rascouet, Daniele Lepido, Thomas Gualtieri, Nate Lanxon and Charles Penty.To contact the reporters on this story: Loni Prinsloo in Johannesburg at firstname.lastname@example.org;Thomas Seal in London at email@example.com;Rodrigo Orihuela in Madrid at firstname.lastname@example.orgTo contact the editors responsible for this story: Rebecca Penty at email@example.com, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- It might be the first workplace tip I was ever given: Always propose a solution when pointing out a problem.The U.S. seems finally to have taken the adage to heart for its approach to China’s Huawei Technologies Co. Attorney General William Barr suggested on Friday that the U.S., either directly or in a consortium with private American or “allied” companies, consider taking a controlling stake in Huawei’s biggest telecommunications-equipment rivals: the European companies Ericsson AB and Nokia Oyj.Sure, the proposed solution might be ill-considered — in this context there is such a thing as a bad idea — but let’s keep things upbeat and try to find a way to make it workable. Where there’s a will, there’s a way, and all that.Having a positive cross-Atlantic proposal on the table is a refreshing change from the U.S.’s general tone over the past 14 months, characterized as it has been by sniping and threats toward nations considering Huawei kit for the fifth-generation mobile networks that are crucial to making the Internet of Things a reality. (As early as 2009, the U.S. found so-called “back doors” in Huawei’s mobile-phone networks and has been telling allies such as the U.K. and Germany about them since late last year, the Wall Street Journal reported on Tuesday.)The U.K., which has been actively managing the role of Huawei’s gear in its network for a decade, has plowed ahead irrespective, albeit with some important checks and balances which seem a sensible way of limiting malicious actors’ access. As Barr himself said on Friday, “It's all very well to tell our friends and allies that they shouldn't install Huawei, but whose infrastructure are they going to install?”QuicktakeHow Huawei Landed at the Center of Global Tech TussleThe proposal was welcomed by some, not least by Cevian Capital AB, the activist fund that’s Stockholm-based Ericsson’s biggest shareholder. No surprise there. Takeover talk helps a share price, and both Ericsson and Helsinki-based Nokia have been among the five worst-performing stocks in the MSCI World Information Technology Index in the past decade.To find a workable solution, a good place to start is to identify the problem. Barr stated it thus: The question is whether, within this window, the United States and our allies can mount sufficient competition to Huawei to retain and capture enough market share to sustain the kind of long-term and robust competitive position necessary to avoid surrendering dominance to the Chinese.That makes it seem like a question of capital. But if cash is what Nokia and Ericsson need, the solution is not simply to acquire them. Were Ericsson to become the target, the buyers would likely need to spend $40 billion on the deal — money that would go straight into the pockets of existing investors before a cent was injected into the firm’s operations. That seems a shoddy allocation of taxpayers’ money. If equity was indeed the means by which to invest, then perhaps a capital increase would be the best option? But for shareholders to stomach the sort of dilution involved, there would have to be a clear way for the firm to benefit from the proceeds and translate them into more value.QuicktakeThe 70-Year-Old Spy Alliance the U.S. Says It May Cut OffWhy would either firm need the capital? Their disadvantage to Huawei in recent years has been their inability, first, to invest in research and development at the same pace, and second, to see their customers’ network costs subsidized with generous financing offers. Huawei has benefited from as much as $75 billion in state-backed financial assistance over the years, the Wall Street Journal reported in December. That helped it charge about 30% less than rivals for its gear. It’s all very well seeking a market-based solution, but China has been leaning on the scales.Being undercut by Huawei has made it harder for Nokia and Ericsson to foot the massive R&D expense that’s needed while they’re having to compete more viciously on price. That’s left them lagging in key technologies related to 5G such as network slicing, a much sought-after technique that will let carriers allocate their capacity more efficiently. Catching up could cost each firm $5 billion, a significant sum similar to what they’re each already spending annually, which already represents an eye-watering 20% of sales. The companies probably have three years before carriers start seeking such capabilities with gusto.The best approach from the U.S. would therefore be to help with both those costs and customer financing. Investing in R&D would have the corollary benefit of creating well-paying American jobs, adding to the combined 24,000 people that the two Nordic companies already employ in North America.Interestingly, on the financing side, the U.S. already has just the mechanism in place — with the U.S. International Development Finance Corporation, which will have a budget of $60 billion to help developing countries and businesses purchase equipment. The agency’s chief has intimated it plans to help counteract Huawei. It started operations in December. Ensuring it has the necessary budget scope also to help firms in developed economies will be essential.Barr’s suggestion may not be a practical one — Larry Kudlow, an adviser to President Donald Trump, acknowledged as much by saying that the U.S. would not be buying either firm — but hopefully it signals a change in American thinking that could lead to workable solutions.To contact the author of this story: Alex Webb at firstname.lastname@example.orgTo contact the editor responsible for this story: Melissa Pozsgay at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
More big names are stepping Mobile World Congress, the world's biggest phone and telecom trade fair, prompting the organizers to urgently decide what they wish to do going forward. Nokia, one of the omnipresent firms at major tech trade conferences, won't be attending this year's Mobile World Congress. Electronics giant HMD, which sells smartphones under Nokia brand, cited similar reasoning for its withdrawal, too.
(Bloomberg) -- Sign up for Next China, a weekly email on where the nation stands now and where it's going next.The Department of Justice announced charges Monday against four members of China’s People’s Liberation Army for the 2017 hack of Equifax Inc., a breach that exposed the personal information of about 145 million Americans.The announcement by Attorney General William Barr follows an indictment in Atlanta accusing the Chinese military personnel of conspiring with each other to hack into Equifax’s network and stealing sensitive data on nearly half of all U.S. citizens.“This was a deliberate and sweeping intrusion into the private information of the American people,” Barr said in a statement. “Today, we hold PLA hackers accountable for their criminal actions, and we remind the Chinese government that we have the capability to remove the internet’s cloak of anonymity and find the hackers that nation repeatedly deploys against us.”Wu Zhiyong, Wang Qian, Xu Ke and Liu Lei, who were members of the PLA’s 54th Research Institute, were charged with three counts of conspiracy to commit computer fraud, conspiracy to commit economic espionage and conspiracy to commit wire fraud, authorities said.They were also charged with two counts of unauthorized access and intentional damage to a protected computer, one count of economic espionage and three counts of wire fraud, according to the Justice Department. Chinese officials disputed the accusations. “The Chinese government, military and relevant personnel never engage in cyber theft of trade secrets,” China’s foreign ministry spokesman Geng Shuang said on Tuesday.In an interview with Bloomberg News, Equifax Chief Executive Officer Mark Begor said that “having China indicted for this really changes the stakes for all of us.”“It definitely raises the bar for all of us on what we need to do to defend the sensitive data that we have,” he said. “We’re in the middle of a very significant technology and security investment because we’re convinced that these attacks are going to continue. And they’re going to be more difficult to defend, and we want to make sure we’re positioned so that this doesn’t happen again to Equifax.”The defendants allegedly exploited a vulnerability in the Apache Struts Web Framework software used by Equifax’s online dispute portal. They used the access to obtain login credentials that could be used to further navigate Equifax’s network and spent weeks running queries to identify the company’s database structure and searching for personal information, according to the Justice Department.The hackers ultimately stored the information in temporary output files, compressed and divided the files and downloaded and exfiltrated the data to computers outside the U.S., according to the Justice Department.“In total, the attackers ran approximately 9,000 queries on Equifax’s system, obtaining names, birth dates and social security numbers for nearly half of all American citizens,” according to a statement from the Justice Department.‘Over the Top’The hackers took steps to evade detection, too, routing traffic through about 34 servers in nearly 20 countries to mask their origin and using encrypted communication channels within Equifax’s network to blend in with normal network activity, authorities aid.“Chinese spying is over the top increasingly dangerous,” said Jim Lewis, a senior vice president and director of the Technology Policy Program at the Center for Strategic and International Studies in Washington. “The PLA has more personal data on Americans than anyone else.”It’s the second time in a week that Barr has raised criticism of China’s behavior on technology issues. Last week he gave a speech warning of the threats he said are posed by Chinese technology, focusing on Huawei Technologies Co.’s 5G networks, and saying the U.S. should consider investing in competitors Nokia Oyj and Ericsson AB.“Unfortunately, the Equifax hack fits a disturbing and unacceptable pattern of state-sponsored computer intrusions and thefts by China and its citizens that have targeted personally identifiable information, trade secrets, and other confidential information,” he said.Equifax announced in September 2017 that hackers accessed data including Social Security numbers, driver’s license numbers and addresses.Hackers gained access to the Equifax network in May 2017 and attacked the company for 76 days, according to a House Oversight Committee report. Equifax noticed “red flags” in late July, and then in early August contacted the Federal Bureau of Investigation, outside counsel and cybersecurity firm Mandiant. The company waited until that September to inform the public of the breach.The breach attracted scrutiny from lawmakers in Washington and criticism from consumers and banks, igniting a debate about the role credit bureaus play in lending.(Adds comment from Chinese officials in sixth paragraph.)\--With assistance from Jenny Surane.To contact the reporters on this story: Alyza Sebenius in Washington at firstname.lastname@example.org;Chris Strohm in Washington at email@example.comTo contact the editors responsible for this story: Andrew Martin at firstname.lastname@example.org, Bill FariesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- China warned France against treating Huawei Technologies Co. differently from European competitors when it comes to future 5G network equipment contracts, as the U.S. mounts a campaign to keep the Chinese tech giant at bay.In a lengthy statement issued on Sunday on its website, the Chinese embassy in Paris urged France to establish “transparent criteria and treat all companies in a similar way,” referring to telecom equipment makers.It also warned that a difference in treatment based on the country of origin would be considered “blatant discrimination” and “disguised protectionism.”The statement also carried a veiled warning.“We do not wish to see the development” in China of Finland’s Nokia Oyj and Sweden’s Ericsson AB being “impacted because of discrimination and protectionism” against Huawei by France and other European countries, the embassy said.Why 5G Mobile Is Arriving With a Subplot of Espionage: QuickTakeThe statement comes as France prepares to auction off 5G spectrum in April. France’s main carrier, Orange SA, has already announced it would leave Huawei out of its 5G network and work instead with Nokia and Ericsson.But two other French carriers who’ve been reliant on Huawei for their 4G networks, Altice Europe NV’s SFR and Bouygues SA’s telecom unit, have yet to name their 5G partners.The U.S. has been pressuring European allies to ban Huawei over fears that China’s government may be able to access its systems for spying. Huawei and Beijing officials deny there’s any such risk.“Huawei’s 5G equipment are totally safe” and have never presented any “backdoor” lapses, the statement from the embassy added.The U.K. government has faced a backlash from some senior lawmakers in its own party following a decision last month to let Huawei play a limited role in its 5G networks. That prompted one of China’s top diplomats in Britain to call their opposition “a witch hunt” in an interview with the BBC on Sunday.President Donald Trump has privately castigated Prime Minister Boris Johnson, and U.S. Secretary of State Mike Pompeo didn’t rule out the possibility that the episode could hurt post-Brexit trade talks between the countries.(Adds Chinese ambassador comment in penultimate paragraph.)\--With assistance from Thomas Seal.To contact the reporter on this story: Angelina Rascouet in Paris at email@example.comTo contact the editors responsible for this story: Thomas Pfeiffer at firstname.lastname@example.org, Jennifer Ryan, Anne PollakFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Deutsche Telekom has told supplier Nokia it must improve its products and service to win business installing the German group's 5G wireless networks in Europe, according to internal documents and a source with direct knowledge of the matter. Europe's biggest telecoms operator has dropped Nokia as a provider of radio gear from all but one of its dozen markets in the region, according to the source and the documents - briefing notes for top Deutsche Telekom management reviewed by Reuters. The documents - written by the vendor management team for internal meetings and talks with Nokia between July and November last year - also show the German group considered Nokia the worst performer among all suppliers in 5G tests and deployments.
Nokia's (NOK) fourth-quarter results reflect strong growth with enterprise customers, driven by increased demand for mission-critical networking solutions.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Nokia Oyj shares gained after the company reported fourth-quarter profit that exceeded expectations, bringing relief to investors concerned about the Finnish company’s checkered performance in the early stages of 5G rollouts.The Finnish network-equipment vendor posted adjusted earnings per share of 0.15 euros in the fourth quarter, higher than the 0.13 euros analysts surveyed by Bloomberg had expected on average.Key InsightsThe improvement in earnings reflects progress on the company’s cost savings program, though lower gross profit, particularly within the mobile access part of the company’s network division, was a drag on the results.Though operating profit of 1.13 billion euros ($1.2 billion) exceeds the Bloomberg consensus estimate of 1.09 billion euros, the company remains under pressure after it slashed its outlook in October and faces the challenge of reducing costs for making equipment to upgrade networks to 5G from 4G.Nokia warned that, excluding China, its addressable market is likely to be stagnant this year compared with 2019, and that pursuing market share in China would challenge profitability -- meanwhile, rival Ericsson AB has been aggressive in trying to expand there.“We have faced challenges in Mobile Access and in cash generation,” Chief Executive Officer Rajeev Suri said in a statement. “While I believe that 2020 will present its share of challenges, I am confident that we are taking the right steps to deliver progressive improvement over the course of this year and to position us for a stronger 2021.”Market ReactionNokia shares gained 4.1% as of 10:19 a.m. in Helsinki. Though the shares are up about 14% so far this year, they still haven’t made up for their 23% drop after the company’s third-quarter report in October.Get MoreNokia employees say management has been distracted by internal politics as it struggles to integrate Alcatel-Lucent following its takeover in 2016.The departure of Chairman Risto Siilasmaa and Chief Operating Officer Joerg Erlemeier were both announced in the wake of the October profit warning, stirring speculation about deeper changes at the company.See the numbers hereGet the statement(Updates with context in first bullet under Market Reaction)To contact the reporter on this story: Niclas Rolander in Stockholm at email@example.comTo contact the editors responsible for this story: Thomas Pfeiffer at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Nokia's (NOK) fourth-quarter performance is likely to have been impacted by the timing of completions and acceptances of certain 5G projects, based on the evolving readiness of the ecosystem.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.BT Group Plc is expecting a 500 million-pound ($650 million) hit over the next five years from the U.K.’s decision to restrict Huawei Technologies Co. in the nation’s broadband infrastructure.Chief Executive Officer Philip Jansen said Thursday the telecommunications company is reviewing the government’s guidance to determine the full impact on its plans. Huawei is one of BT’s biggest suppliers of telecom equipment, and in the U.K. has a 44% market share in full-fiber components.BT shares fell 6.3% at 9:37 a.m. in London after the company reported third-quarter profit that missed analyst estimates. The impact on BT of the new rules on telecom suppliers was “worse than expected,” said analysts led by Carl Murdock-Smith at Berenberg.Britain decided on Tuesday to ban the Shenzhen-based vendor’s gear from the core of new wireless networks and cap its market share in next-generation 5G technology and fiber-to-the-home at 35%. Carriers have three years to make the needed changes. Though BT had already begun efforts to remove Huawei from the core of the EE mobile network it acquired in 2016, it will now need to lean more on other suppliers such as Nokia Oyj for the rest.U.K.’s Huawei Limits Invite New Players to Redraw Telecom MarketThe bulk of the cost to meet the new guidelines will come from the need to switch some Huawei 4G kit to gear made by a different supplier, in order for new 5G equipment to be layered on top of the older antennas, Jansen said on a call with reporters.“Targets stay the same, costs go up, and there’s a lot of operational upheaval. But we can manage it,” Jansen said. As for the time limits, Jansen said that three years is “one of the options we considered, and what we said today is we can do that, no problem.”His initial assessment is the first from one of the nation’s top carriers. For BT, the matter is not the only regulatory issue that could weigh on its future.Fiber InvestmentBT also called for more clarity on the U.K.’s push to roll out fiber-optic broadband across the country, pointing to the need for a fair return on further investment, and lower property taxes. A step-up in construction could need an extra 400 million pounds to 600 million pounds per year, which may need to be funded from a cut to the dividend or additional borrowing.“Boris’s objective of full fiber to the whole country by 2025 is possible. It’s just very very hard. And we have no time to waste,” Jansen said on an call to reporters. “My sadness is I don’t think those things will get resolved quickly and therefore he may well miss” the target.BT reported adjusted earnings before interest, tax, depreciation and amortization of 1.98 billion pounds, versus a company-compiled consensus of 2 billion pounds. The miss was due to underperformance at the company’s IT services division.Prospects for a marked improvement in profitability any time soon are dim: Rivals have undercut BT on prices for new 5G mobile services, Vodafone Group Plc has poached key enterprise customer Liberty Global Plc, while watchdog Ofcom is introducing rules which make it easier for customers to find lower tariffs and switch providers.What Bloomberg Intelligence Says“A cut to BT’s dividend from fiscal 2021 now looks almost inevitable, in our view, as higher 5G and full-fiber network build-out costs add to an enduring squeeze on profit from regulation and rivalry.”\--Matthew Bloxham, telecom analystJansen said the profit result was “slightly” below expectations, and “we remain on track to meet our outlook for the full year.”However James Ratzer and Ben Rickett, analysts at New Street Research, questioned the company’s ability to achieve profit growth by next year, and said the costs from the government’s Huawei decision could be a precursor to a reduction in free cash flow expectations.The consensus of analyst estimates published by BT is for Ebitda to increase 0.2% by the end of the fiscal year ending in March 2021. Jansen’s predecessor, Gavin Patterson, said in May 2018 that Ebitda could return to growth from 2021.“The current Ebitda trends will also raise questions on whether FY21 Ebitda can grow, as consensus and the company currently expect,” the analysts said.(Adds CEO quote in sixth and ninth paragraphs, analyst comment in last paragraph, updates share price)To contact the reporter on this story: Thomas Seal in London at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Jennifer RyanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- How would you feel if your doctor, on hearing you’ve got diet-related health concerns, just told you to watch your diet? “I know,” you respond. “But which parts of my diet? What should I cut out and how much?” The reply: You should closely study the list of ingredients in anything you eat and decide for yourself.This is pretty similar to the European Union’s recommendations for dealing with Huawei Technologies Co., the world’s largest maker of telecommunications equipment. The Chinese firm has become a source of concern, not least in the U.S., over risks that it could create backdoors in the networks it helps build for exploitation by Chinese state actors.The EU’s executive body on Wednesday unveiled its much-anticipated guidelines for how the bloc’s national governments should handle cybersecurity in the era of fifth-generation mobile networks. The suggestions are sensible. They include assessing the risk profile of suppliers, putting restrictions on those that don’t pass the smell test, auditing operators and ensuring a diversity of suppliers. Crucially, it fails explicitly to name Huawei or China, instead referring to “high-risk suppliers.” Member states have the leeway to determine what constitutes such a supplier and then implement any solutions themselves.The problem is that some countries are far better equipped to tackle the challenge than others, as exhibited by the U.K.’s measured and well-considered solution to tackling Huawei unveiled on Tuesday. The soon-to-be-former EU member’s plan will clearly require constant ongoing work and revisions, but Britain has been proactively tackling the issue for more than a decade. Back in 2010, it set up a center in Oxfordshire that evaluates all of Huawei’s products before they enter the British network.Along the way, the U.K. has been proactive about limiting Huawei’s role in its domestic telecoms industry. So when Prime Minister Boris Johnson said the Chinese firm would be kept out of the core network and restricted to 35% of the radio-access network, he was to an extent simply reaffirming the existing reality.The situation is significantly different in Germany. The country’s incumbent operator, Deutsche Telekom AG, is dependent upon Huawei products for half of its network equipment, perhaps more. A similar lab to the one in Oxfordshire was only set up in 2018 in Bonn, and is considered less advanced.“We’re very late to wake up,” Thorsten Benner, co-founder of the Global Public Policy Institute in Berlin, told me. “The U.K. intelligence services saw it as a problem all along. Germany just went for the cheapest supplier.”So as much as the measures outlined by the European Commission make sense, following them effectively is a tougher proposition. And if it’s hard for Germany, Europe’s largest and most prosperous nation, the prospects are dimmer for smaller states. Take Hungary, for instance, where Huawei employs 2,000 people and has a major logistics center.Some of the responsibility for the quandary must be borne by the Commission itself. Competition policy has repeatedly blocked mergers in the region that might have helped carriers’ profitability: Average revenue per user has fallen from 21.60 euros ($23.75) a month in 2008 to 12.80 euros in 2018. That has forced carriers to find cost-savings elsewhere, providing an opening for Huawei to make inroads with its low-cost gear (thanks to subsidies from the Chinese state), and displace the pricier European rivals, Ericsson AB and Nokia Oyj.The situation is exacerbated in markets such as Poland or Romania, where revenue per user averages less than 10 euros. The contrast with the U.S., where AT&T Inc. and Verizon Communications Inc. enjoy income of close to $50 per user, is stark. They enjoy far healthier returns on investment.The EU is finally proposing checks and balances that should have been in place a long time ago. But they are little more than a starting point. Don’t be surprised if the likes of Germany, France, Spain and Italy lean more heavily on the U.K.’s lead. For the rest, there’s still plenty of scope for member states to continue voraciously gobbling down the Chinese candy.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The U.K.’s decision to allow China’s Huawei Technologies Co. to be involved in building its 5G telecom networks won’t affect trans-Atlantic intelligence sharing, despite U.S. threats to the contrary, Digital Secretary Nicky Morgan said.Britain gave the green light for Huawei kit to be used in non-sensitive parts of its new networks Tuesday, ending a protracted debate. In the run-up to the decision, there was a steady drumbeat of warnings from President Donald Trump’s administration that the U.S. may hold back secret intelligence if Prime Minster Boris Johnson pressed ahead with giving the company a role.Asked in a Bloomberg Television interview whether she’d had assurances before the decision to include Huawei -- deemed a high-risk vendor, Morgan said: “Yes, we’ve obviously had a lot of advice from our various security agencies about that,” before adding: “There is no reason why the decision should or would affect our ability to share classified data with the U.S. or our allies.”U.S. Secretary of State Michael Pompeo, who was among officials to warn Britain ahead of the decision, is in London on Wednesday and is likely to raise the issue in meetings with ministers. A slew of U.S. congressional figures have already criticized the U.K.’s position and Johnson and Trump spoke about the issue on Tuesday evening, with the premier underlining the need for Western allies to work together to break the market dominance of a small number of companies.“I know that there are very strong feelings in the U.S. particularly in relation to China, but there are many, many areas where we cooperate very fully in lots of different ways with the U.S., and I think that special relationship will remain,” Morgan said on Wednesday. “We would like eventually to have more providers to work with the U.S. and other countries creating or supporting companies to have this capability,” she said, “so we don’t have to rely on high-risk vendors in the future.”U.S. Disappointed as Johnson Gives Huawei Partial 5G Role (1)With Ericsson AB and Nokia Oyj the only alternatives, Huawei’s involvement is needed to ensure the networks are resilient because “we would never want to rely just on two vendors,” Morgan said.“That’s why a third provider is necessary,” she said. “At the moment it’s deemed to be Huawei, it’s a high risk vendor, but hopefully the market will respond to calls for more diversification so we will have a better choice in the future.”Morgan, who earlier told LBC Radio that the National Security Council decision on Huawei was “unanimous,” pointed out that the U.K. has monitored the Chinese company’s involvement in U.K. telecom networks for years, and is “clear-eyed” about the risk. That, she said, informed the decision to keep the company out of core networks and sensitive locations and limit them to a 35% share of the market.“We know more about Huawei, the way they operate, their capabilities, than any other country, which means we are confident we can mitigate the risk,” Morgan said. “We would not make the decision if we thought that it compromised national security at all.”\--With assistance from Anna Edwards and Matthew Miller.To contact the reporter on this story: Alex Morales in London at email@example.comTo contact the editors responsible for this story: Tim Ross at firstname.lastname@example.org, Giles Turner, Thomas PennyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- U.K. Prime Minister Boris Johnson risked a rift with President Donald Trump as he gave Huawei Technologies Co. the green light to help develop Britain’s next-generation broadband networks.While the U.K. government announced it will keep what it calls high-risk vendors such as Huawei out of the most sensitive core parts of its 5G mobile networks, the company will be able to supply other equipment that is critical to the roll-out of broadband such as antennas and base stations.That is a blow to the Trump administration, which wanted Johnson to impose an outright ban on the Shenzhen-based tech giant, citing concerns that its gear could be vulnerable to infiltration by Chinese spies. The two men spoke about the U.K. decision on Tuesday, according to Johnson’s office. American officials had warned the U.S. may be forced to hold back secret intelligence from the U.K. in future, if Johnson pressed ahead with giving Huawei a role. The company has always denied it poses any security risk.A key pillar of Johnson’s vision for a future outside the world’s richest single market is a trade deal with the U.S. and the Huawei license risks setting up a clash with Trump. On their call on Tuesday, Johnson “underlined the importance of like-minded countries working together to diversify the market and break the dominance of a small number of companies,” his office said.The initial reaction from Washington was muted.A senior U.S. administration official expressed disappointment at Johnson’s decision, but also hope that the U.S. and the U.K. could still find some way to exclude components from untrusted vendors in 5G systems in future. Trump himself has yet to comment, and is preparing to announce his Middle East peace plan later Tuesday.Read More: U.K. Still Wary of China Hacking Threat After Limiting HuaweiReactions from Congress were more critical. “Here’s the sad truth: our special relationship is less special now that the U.K. has embraced the surveillance state commies at Huawei,” said Republican Senator Ben Sasse of Nebraska.Republican Senator Marsha Blackburn of Tennessee suggested curtailing intelligence-sharing with any allies whose networks run on the equipment of “untrusted” vendors. “If we have exhausted our carrots with the Brits, it may be time to use a stick,” Blackburn said in a statement. Republican Senator Tom Cotton of Arkansas, in a reference to Brexit, said: “I fear London has freed itself from Brussels only to cede sovereignty to Beijing. Allowing Huawei to build the U.K.’s 5G networks today is like allowing the KGB to build its telephone network during the Cold War.”In London, too, senior members of Johnson’s ruling Conservative Party expressed dismay at his decision. Former party leader Iain Duncan Smith, and ex-cabinet minister David Davis warned of the security risks the Chinese company posed. “The size and complexity, the problem we are trying to protect against, is enormous,” Davis told the House of Commons. “Huawei should be banned from our networks.”The widely-expected announcement by Johnson’s government is a compromise between the outright ban on Huawei sought by the U.S. and the access sought by telecommunication companies. While it ends months of political wrangling in the U.K., the process remains fraught with peril for Johnson as he prepares to end Britain’s 47 years of European Union membership and plans to negotiate a new trade deal with the U.S.Market ShareUnder the U.K.’s policy, a cap of up to 35% will be imposed on Huawei’s share of the non-sensitive parts of the next-generation networks, such as antennas, masts and even fixed-line fiber-to-the-home components.High risk vendors, a category which would also include China’s ZTE, which is already banned from the U.K., are also to be “excluded from sensitive geographic locations, such as nuclear sites and military bases.”The 35% cap will be kept under review and could reduce over time, the government said. The cap is roughly in line with Huawei’s current overall market share in 4G, and Huawei said it was expected and reasonable. U.K. officials said the cap could be reduced over time, and the aim is to work with allies to help develop alternatives and get to a stage where the country doesn’t need to rely on high-risk vendors at all.However, the cap may mean that phone carriers like BT Group Plc’s EE, Vodafone Group Plc and Three have to rejig their 5G plans to comply. Three, a unit of Hong Kong-based CK Hutchison Holdings Ltd., had been depending on Huawei to deliver the entirety of its 5G radio-access network, with Nokia chosen to provide the core.Dave Dyson, chief executive officer of Three U.K., said in a statement: “We note the government’s announcement and are reviewing the detail.”Ericsson AB and Nokia Oyj are the primary Huawei rivals in networking equipment now, but the U.K. decision may help create more options for certain segments of wireless networks. Cisco Systems Inc., Juniper Networks Inc., Ciena Corp. and Infinera Corp. may benefit as wireless operators look for alternative suppliers, said Woo Jin Ho, a Bloomberg Intelligence analyst.Huawei ReassuredIn a statement, Huawei Vice-President Victor Zhang said it was “reassured” that the U.K. will let the company keep working with carriers on 5G.“This evidence-based decision will result in a more advanced, more secure and more cost-effective telecoms infrastructure that is fit for the future,” he said, committing to build on Huawei’s more than 15 years supplying U.K. telecom operators.The Confederation of British Industry, the leading business lobby in the country, said “this solution appears a sensible compromise that gives the U.K. access to cutting-edge technology, whilst building in appropriate checks and balances around security.” Vodafone, which uses Huawei in its U.K. radio network, said “we aim to keep any potential disruption to customers to a minimum.”By curbing Huawei’s access but still allowing the supplier to play a role in 5G, British officials are betting they can manage any security risks at home and still maintain intelligence-sharing ties with the U.S. and other allies.Johnson discussed Huawei in a phone call with Trump on Friday, and clearly wasn’t swayed by the push for a total ban. The prime minister said the U.K. could have the best of both worlds: retaining access to the best technology while protecting the data of consumers. British security services deem the risks manageable.For the U.K. timing of its announcement is particularly sensitive. U.S. Secretary of State Michael Pompeo, who had warned Johnson’s predecessor not to “wobble” on the issue, is due to visit on Wednesday.Huawei has been a key supplier to the U.K. and many other European phone networks for over a decade so this decision will be closely watched by others. In fact, many European nations are leaning in the same direction as the U.K.QuickTake: Can a 70-Year-Old Spy Alliance Endure in Era of 5G?The EU will publish its own guidelines on Wednesday which give leeway to member states to restrict or ban Huawei without forcing them to do so. According to a draft of the document seen by Bloomberg, countries should consider banning suppliers based in countries with insufficient “democratic checks and balances” from core 5G components.Canada has also indicated interest in a similarly split decision -- allowing Huawei while also pledging to contain any security risk.A key concern of the U.S. is that other countries will copy-and-paste the U.K.’s solution, relying on its regulatory system and high level of access to Huawei technology.“The U.K. model isn’t easily replicated,” warned Ian Levy, technical director of the National Cyber Security Centre, in a blog published alongside the decision. “The approach we’ve come up with for the U.K. is specific to the U.K. context. Others shouldn’t assume they’re getting the same level of protection for modern networks if they do similar things without performing their own analysis.”The market is broken, he added, because it’s not commercially attractive to build good security into networks.(Updates with Huawei alternatives in 16th paragraph)\--With assistance from Olivia Konotey-Ahulu, Josh Wingrove and Kevin Cirilli.To contact the reporters on this story: Thomas Seal in London at email@example.com;Alex Morales in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Flavia Krause-Jackson at email@example.com, Tim Ross, Rebecca PentyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- In the end, the prospect of eye-watering costs and delays to the roll-out of critical technology proved more daunting for the British government than American threats.On Tuesday, the U.S. lost its long battle to persuade the U.K. to ban China’s Huawei Technologies Co. from fifth-generation wireless networks. The decision to let Huawei build the periphery of the 5G system showed the awkward position of U.S. allies asked to choose between Washington and Beijing. It also reflects waning U.S. leverage in Europe—including post-Brexit U.K.—at a time when the transatlantic alliance is strained.President Donald Trump’s administration has been clear about what it sees as the problem: a potential Chinese breach of allied national security. It’s been less clear on a viable solution for countries desperate not to fall behind in the race for the infrastructure that will underpin such advances as driverless cars and automated factories.Read More: U.K. Allows Huawei to Build 5G NetworksWith few alternative companies able to supply the 5G market, the U.S. couldn’t counter the significant added costs and delays involved in banning Huawei outright. Secretary of State Michael Pompeo arrives in London on Wednesday and it’s now up to the U.S. to decide whether to raise the temperature in a public dispute between close allies.The threats so far have included cuts to intelligence sharing, although that would come at significant cost to the U.S. itself and British officials don’t believe it would follow through. GCHQ, the British equivalent of the U.S. National Security Agency, operates a hub for the “Five Eyes” members—Australia, Britain, Canada, New Zealand and the U.S.But as Britain leaves the European Union on Friday, there’s much more in play. The response to the Huawei decision has potential to bleed across to trade negotiations, British plans for a digital tax on tech giants and the broader post-Brexit relationship including a budding political friendship between Trump and Prime Minister Boris Johnson.“It’s in the U.S. gift to accept that even if we disagree in the details, we agree on the fundamentals and move on to the much more important issue of developing western vendors” for 5G telecommunication networks, said Malcolm Chalmers, a former U.K. diplomat and now deputy director of the Royal United Services Institute, or RUSI, in a briefing.QuicktakeHow Huawei Landed at the Center of a Global TussleThe EU is expected to announce on Wednesday guidelines for member states to use in deciding 5G issues, including rules that would permit, but not require, governments to restrict or ban the use of Huawei equipment.Going forward, said Chalmers, countries will need to redress the market failure at the root of the Huawei dispute: The tiny number of vendors—none of them American—that are able to build 5G networks at scale. Not only does that force an over-reliance on Chinese suppliers, it also reduces options to build backups into networks—a key cyber security tool—so that if one manufacturer’s antenna stops working, another’s will continue. Britain’s reliance on just three suppliers, including Huawei, is “crazy,” according to Ian Levy, technical director at Britain’s National Cyber Security Centre. He made the comment in a blogpost published on Tuesday to explain how U.K. security agencies plan to protect its 5G network.Samsung Electronics Co. Ltd. said last year it aimed to boost its share of the global telecommunications equipment market to 20% gear from less than 7%. But the hurdles to new entrants Levy checked off in his post—including low margins, high research and development costs, patent license fees and scale—are considerable. U.S. OptionsThis month, Thomas Donahue, a former senior director for cyber operations on the U.S. National Security Council, wrote that the federal government had three options: invest heavily in Huawei’s European alternatives, Ericsson AB and Nokia Oyj, buy one of them, or massively fund the development of a U.S. competitor.The U.S. Defense Science Board recommended in June that the federal government should provide seed funding for “western industrial base alternatives” to Huawei.When it comes to an immediate Huawei ban, though, the U.S. has struggled to persuade European countries to follow the lead it has set with Australia, a Pacific nation that faces a more immediate security threat from China.The argument centers on whether, in the new world of 5G, risks posed by a potentially hostile equipment supplier can be managed. Britain’s electronic intelligence agencies appear to have rejected U.S. claims that in 5G networks the core has become “virtual” and so widely distributed that the distinction at the heart of Tuesday’s decision—between a sensitive core and dumb periphery—no longer exists.The edge of a network will still face the consumer and, if hacked, give access almost exclusively to metadata, not the sensitive materials in the core, said James Sullivan, RUSI’s head of cyber research. “5G networks are not revolutionary,” said Sullivan, who just completed a nine-month study on the issue. “They are evolutionary.”Huawei has been building mobile network infrastructure in the U.K. for more than 15 years. British officials were concerned enough about the security risks involved that in 2010 they set up an inspection center to reverse engineer the company’s equipment and assess it for security risks.The center’s annual reports have been damning. Last year’s concluded that “it will be difficult to appropriately risk-manage future products in the context of U.K. deployments, until the underlying defects in Huawei’s software engineering and cyber security processes are remediated.”It was because of the center’s work “that we know more about Huawei, and the risks it poses, than any other country in the world,” U.K. Foreign Secretary Dominic Raab told parliament on Tuesday. He also pledged to attract more 5G vendors.But if it shares U.S. concerns about Huawei, the U.K. is also in a very different starting position. To ban Huawei it would need to first rip out existing Huawei 4G hardware, causing significant costs and delays. That’s in addition to forgoing the steep price discount the company offers over competitors. In the U.S., the Chinese company has sold equipment only to some smaller rural networks.That cost raises questions about how much more secure it would be to use non-Chinese hardware, another gray area. Equipment supplied by Western companies is shot through with Chinese components, while some of the most prolific hacking is done by Russia, which does not produce any of the hardware it hacks.“The initial argument—why would you allow a Chinese provider, a frenemy, right into the core of your network—does sound crazy,” said Emily Taylor, chief executive of Oxford Information Labs, a cyber consultancy. “But when you look at it, no piece of equipment will ever be 100% secure.”To contact the author of this story: Marc Champion in London at firstname.lastname@example.orgTo contact the editor responsible for this story: Rosalind Mathieson at email@example.com, Rodney JeffersonFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.