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Banning Huawei may cost EU extra €55 billion

A blanket ban on purchasing telecommunications products from leading Chinese telecommunication firms such as Huawei and ZTE, according to industry analysis from Reuters, is likely to incur additional costs of up to €55 billion (US$62.2 billion), as well as slow down 5G penetration in the EU by at least 18 months.

GSMA, a telecommunications lobby group, reported that the additional costs will be incurred from the aftermath of loss in competitiveness from the mobile equipment market and the implementation of infrastructure upgrades for 5G roll-outs.

Other than being able to download movies with a snap of the fingers, the maturing 5G technology will be used to enhance IoT devices, supply chain logistics and the realisation of smart cities.

The two Chinese leaders in 5G technology held a combined market share of more than 40% in the EU. Hence, if the EU heeds the pressure from the US to blacklist the Chinese companies, it would inevitably slow down 5G roll-out in the EU countries.

If there is a sudden surge in demand for 5G equipment in Europe, will equipment makers such as Ericsson, Nokia and Samsung be able step up and overcome cost and delivery challenges?

In March 2019, Poland, an ally of the US, shunned calls from US authorities to ban Huawei from its 5G networks. The Polish telecommunications infrastructure utilises Huawei’s equipment as it is competitively priced.

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