It is all about politics and the economic war. Such a decision from a giant operator like Vodafone can't be linked to only what is called a "Security Breach". We all know what's going on behind closed doors. Since the drastic fall down of Motorola the bad results after the Nokia-Siemens (NSN) merge which resulted in another recall of the Nokia brand again, the degraded performance of Ericsson internationally, the Chinese giant kept its vast growing with no stop. But we all know when it comes to economic impacts than for sure the blame will be "It is the Chinese lower costing modules". Back in the early twenty-first century, there were no barriers on vendors' equipment purchase. the essential for operators was adding more capacity and capability on the network to absorb more users. Without differentiating between higher profile or lower profile customers, it was all about winning the market share. that was the era of the quick win especially for vendors like Ericsson, Alcatel, Motorola and other. But entering the era where revenues have started to be more important than market share then Huawei have picked up the low cost and TCO CAPEX module, and this was just the beginning. From being a switch fabricator to a giant that cannot be stopped. starting from his local market to be on top of the telecom industry.
Other vendors didn’t quickly wake up until late and really It was late until they discovered that cost is the key to an operator and lower CAPEX modules are the main driver for decisions.
With a quick look at the local Chinese telecom market, it is noticeable that even Ericsson and Nokia exists. It’s not because they are considered competitors but just only because some political considerations that kept them and we must admit that it was an excellent tactical decision form the Chinese government.
To reach a 70% footprint in the worldwide telecom market, cannot be only considered as a vendor market share, it is indeed a worrying percentage that kept its growing.
In the Economics liberals mindset, we liked it or not, it is considered as the communists are beating us inside our homes. This is my consideration and how I am analyzing this situation. Am I a radicalism? No, I am not but it is a fact that can be translated from all this economic war between the liberal world and China. Not to forget that Russia also has its part of this war.
If you cannot have it then try to break it. This is the rule now. Look back to what happens with ZTE and what is happening now. From being banned, to a massive unfair penalty that ZTE was obliged to pay, to an over Billion dollar debt, to the split of ZTESoft from ZTE and the merge with Alibaba. Following all this the recent ban on the 5G entrance in Japan and the Pacific.
Adding that Huawei also was banned in these zones and now talking about security breaching and risk from not being at a Core side of the network is considered as there is a high risk of being breached by them. So yes, if you cannot have it them try to break it and this is what is happening now.
Last and not least, we all understand the financial pain of all other vendors. The drop on Q4 profit with Nokia and the boost program of its profit by lowering its operational cost by 700M$, the other cut cost initiative by the new Ericsson CEO to lower the operational cost in order to be able to be back profitable. This all we most compare it with a 7.55b$ NET profit of Huawei that shook all others.
Now, who is the winner from all this 5G ban strategy and this screaming Security Breaching?
For you gentlemen to guess.
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