Although the European Commission has classified Huawei as a security threat, the dependence of European governments and telecom operators on Huawei equipment is far greater than expected. Latest data shows that among the 31 European countries that have deployed 5G services, only six countries completely avoid using Huawei equipment, while 15 countries have more than one-third of their 5G base stations relying on Huawei technology. This ongoing market dependence is intensifying the difficulties faced by the two Nordic telecommunications equipment giants, Ericsson and Nokia.

The Surface-Level "Decoupling from Huawei" in Germany

Germany's approach to the Huawei issue is representative. In July 2024, the German government issued a statement requiring telecom operators to ensure that 5G core networks are free of Huawei and ZTE components by the end of 2026, and to replace "critical management systems" in 5G access and transmission networks by 2029. This statement may seem firm, but its actual implementation is significantly diluted.

(Source: IMAGINECHINA Co., Ltd.)

Data from Danish analysis firm Strand Consult shows that Huawei accounted for 57% of Germany's 4G base stations in April 2019, and its share in Germany's 5G base stations rose to 59% by 2024. Deutsche Telekom and Vodafone, two of Germany's three major mobile operators, consider Huawei as a primary wireless access network supplier, while Spain's Telefónica distributes business between Huawei and Nokia.

Industry experts point out that Germany's "de-Huawei" plan has obvious loopholes. Since no operator used Huawei or ZTE equipment in 5G core networks at the time, the related ban had little practical value. In other network parts, operators only need to replace a small part of the system, such as configuration management, and can still retain Huawei's base stations and base station software.

Discrepancy Between Market Reality and Policy Idealism

EU Commissioner for Tech Sovereignty Henna Virkkunen said early this year: "I am very concerned that a large number of 5G base stations in EU member states are still provided by high-risk suppliers, which could have potential serious negative impacts on the security of end users, businesses, and critical infrastructure."

However, European telecom operators' actual choices contradict the policy direction. The main reasons include: first, 5G investment has not yet brought expected returns, and operators are unwilling to bear the expensive cost of replacing equipment; second, Huawei still has a significant advantage in 5G technology; third, early Nokia 5G products had technical issues, weakening their competitiveness.

Vodafone Group originally planned a tender covering 170,000 base stations across Europe and Africa, which was seen as a major opportunity for Huawei's competitors. However, the results of this tender were already announced to participants at the beginning of this year, but Vodafone has not publicly disclosed any results, and even omitted this matter in its latest annual report.

Severe Challenges Faced by the Nordic Giants

Continuing loss of market share is severely impacting the performance of Ericsson and Nokia. According to Omdia data, global wireless access network sales fell sharply in 2023 and 2024, with revenue in 2024 reaching about $35 billion, a drop of more than one-fifth compared to 2022. Sales in the first quarter of 2025 remained flat year-on-year, with an expected full-year growth of only a low single-digit percentage.

Nokia's situation is particularly severe. Its global wireless access network market share dropped from 19.5% in 2023 to 17.6% in 2024, while Ericsson increased from 24.3% to 25.7%. In the U.S. market, Nokia is being replaced by Ericsson, losing one-third of AT&T's network business. After losing Verizon customers several years ago, T-Mobile remains Nokia's only major wireless access network customer in the U.S.

Financial data reflects the severity of this market pressure. Nokia's mobile network business group revenue fell from about €2.4 billion in 2020 to about €1.7 billion in 2025, with an operating profit margin of just 4.4%, down by half from the previous year. To cope with the crisis, Nokia's employee count decreased from approximately 86,700 in 2023 to 75,600 by December last year.

Although Ericsson has performed relatively better in the wireless access network field, it also faces multiple pressures, including market stagnation, U.S. tariffs, and a weak dollar. 44% of Ericsson's second-quarter revenue comes from the U.S. market, showing a high reliance on U.S. business. After the boom in India's 5G network deployment ended, the relevant business seems to have dried up, with China market revenue falling 37% to about 2.2 billion Swedish kronor.

Evolving Technology Competition Landscape

Notably, the current technology competition landscape has undergone significant changes. After the 2016 acquisition of Alcatel-Lucent, which brought product problems and management distractions, Nokia's 5G business has regained technological footing. South Korean Samsung proved its strength as a viable 5G option through an important contract with Verizon, which should alleviate concerns about the Nordic duopoly.

However, given that telecom operators have not yet made profits from 5G investments, they lack enthusiasm for plans to replace Huawei equipment ahead of schedule. Recently, Ericsson CEO Eriksson expressed doubt about whether new opportunities to replace high-risk suppliers in Europe can be realized, while Nokia's new CEO Justin Hotard remains relatively optimistic about it.

Europe's hesitation on the Huawei issue may further weaken Nokia's mobile network business and potentially prompt Ericsson to follow in the footsteps of Viking Leif Erikson from centuries ago, relocating its headquarters from Sweden to the United States. For a Europe with increasingly fewer large global influence companies, this would undoubtedly be a disaster.

Original article: https://www.toutiao.com/article/7532701553803739683/

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