China Mobile has chosen Huawei and ZTE for its 5G core network, snubbing the Nordic telcos Ericsson and Nokia, according to the South China Morning Post.
Huawei and ZTE were each awarded about 50% of China Mobile’s work, worth a total of about $1.16 billion. The two Shenzhen-based companies will help China Mobile build its converged 4G/5G core in 31 provinces around the country.
China’s big telecom operators have been favoring Huawei and ZTE the last couple of years, likely in retaliation for the attacks on the Chinese vendors. The U.S. has claimed Huawei and ZTE equipment poses national security issues because the companies must do the bidding of China’s authoritarian government.
While the Chinese vendors have been shut out of many countries around the globe, they’re doing a booming business within China.
China is also getting a fourth wireless provider — China Broadcasting Network (CBN) — which has been awarded spectrum by the Chinese government. CBN is entering the wireless market by partnering with China Mobile to co-build and share a 5G network under an 11-year agreement.
The joint venture between China Mobile and CBN has been awarding the bulk of its contracts to Huawei and ZTE, leaving only small percentages for Ericsson and Nokia. And the other wireless carriers — China Unicom and China Telecom — have been following the same pattern.
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Nordic telcos
Meanwhile, Ericsson and Nokia may have improved prospects in most parts of the world because competition from Huawei and ZTE has been removed, but the Nordic vendors are taking a hit in China.
Speaking during Ericsson’s second quarter earnings presentation in July, CEO and President Börje Ekholm warned investors to plan for a significant reduction in market share in China.
RELATED: Ericsson shutters R&D center in China as market share suffers
And in September Ericsson said it was shutting down one of its five R&D centers in China. It will divest its product research and development activities in Nanjing by November.
So it seems China is circling the wagons around ZTE and Huawei, essentially limiting its telco vendor landscape to just those two companies.
However, the rest of the world is seeing increased competition in the vendor landscape due to the popularity of open radio access network (RAN) technology. The open RAN movement is having the effect of bringing scores of upstart technology vendors into the marketplace.