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BT and Vodafone jump after UK government allows seven years for Huawei ban

“This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy,” media secretary Oliver Dowden said

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BT Group PLC (LON:BT.A) and Vodafone PLC (LON:VOD) have been given longer than they expected to remove Huawei equipment from their 5G mobile networks.

The UK government said telecoms companies would need to rip out all of the Chinese tech giant's equipment from their networks by 2027.

READ: BT boss warns of dangers in ripping Huawei equipment out of UK telecoms network

Media secretary Oliver Dowden confirmed on Tuesday afternoon that the operators will not be able to purchase 5G components from Huawei from the end of this year.

Around 60 Tory MPs have reportedly been putting pressure on ministers to phase out Huawei technology from the country's communications infrastructure much faster. 

Prime Minister Boris Johnson had been expected to impose a ban on companies buying new equipment for their 5G networks from next year and to target 2024 for stripping out all of the Chinese company's equipment from existing infrastructure.

“The NCSC (National Cyber Security Centre) has now reported to ministers, that they have significantly changed their security assessment of Huawei’s presence in the UK’s 5g network,” Dowden told MPs.

“This has not been an easy decision, but it is the right one for the UK telecoms networks, for our national security and our economy, both now and indeed in the long run,” he said.

“By the time of the next election, we will have implemented in law an irreversible path for the complete removal of Huawei equipment from our 5G networks.”

Huawei said it was a “disappointing” decision was “bad news for anyone in the UK with a mobile phone” and “threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide”.

As well as the large group of Conservative MPs, major pressure on Johnson has also come from US President Donald Trump, whose administration has accused Huawei of being an agent of the Chinese state.

Last week China’s ambassador to the UK, Liu Xiaoming, urged the government to rethink a ban and warned there would be “consequences” if Britain tried to treat China as a “hostile country”.

Impact on BT and Vodafone

BT boss Philip Jansen said yesterday that security and safety for the company’s 24 mobile customers could be put at risk if the company is forced to rip Huawei equipment out across its network too fast. 

The UK's former telecoms monopoly has relied heavily on Huawei equipment to run its current 4G mobile network, with two-thirds of its existing network estimated to incorporate equipment from the Chinese tech group.

For Vodafone, Huawei accounts for around a third of its UK mobile network, though the country generates less than 10% of underlying group profits.

The government’s previous plan was expected have a £500mln impact on BT’s 5G mobile rollout, front-loaded over the next five years, Jansen said earlier this year.

Analysts at UBS have previously calculated that there is a risk that a reduction to zero Huawei equipment would double BT's capital expenditure on the project

But with news that the deadline is pretty distant, BT shares were up almost 4% in afternoon trading to 115.1p and Vodafone more than 1% to 126.3p. 

Quick facts: BT Group PLC

Price: 110.2 GBX

Market: LSE
Market Cap: £10.93 billion

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