- The Chinese government may label Ericsson and Nokia as untrusted vendors
- This follows Nokia’s CEO’s call for a European rip and replace program
- Analysts note that this kind of geo-political posturing could lead to a splintering of telecom standards over time
Are you ready for another geo-political twist on the telecom vendor scene? Nordic telecom vendors, Ericsson and Nokia, which are among the only major Western players in both the macro public radio access network (RAN) and private network game, may soon be facing a full ban from the Chinese government.
Indeed, the Chinese government may soon start to call Nokia and Ericsson untrusted vendors. This follows moves by the Australian government, the U.S. government, the European Union and others to fully or partially ban or even rip and replace telecom equipment from Huawei and ZTE because the Chinese gear is considered a security risk.
The ban on Chinese equipment has been more successful in some regions than others, with Australia being the first country to institute a ban on Huawei in 2018.
A China ban would put more burn on Nokia and Ericsson’s market share, which is already behind Huawei in the global market, according to Dell’Oro Group. Ericsson and Nokia already have a single-digit market share, with local operators generally preferring to buy from Huawei, ZTE and other domestic operators.
“What China is doing here... they want to put the stamp on Ericsson and Nokia as untrusted vendors, they want to do that to kill American clout outside the United States,” said John Strand, president of Strand Consult on the phone to Fierce on Tuesday.
“It doesn’t matter,” he said, that Nokia and America aren’t actually American companies. “This is the free world against who don’t believe in democracy.”
Untrusted times
Strand claims that China branding Nokia or Ericsson as “untrusted” could further blunt their share in regions like Africa and Latin America, where Huawei and ZTE are already the favored vendors for telecom deployments. He adds that Nokia and Ericsson already don’t sell to Russia, North Korea or Iran.
“While both Ericsson and Nokia have a shrinking share of the China market, they do still have business there,” said Recon Analytics Analyst Dary Schoolar in an email to Fierce. “For the year 2024, 4% of Ericsson’s revenues came from that market and around 5.6% of Nokia’s revenues.”
“Given the challenges both vendors have faced when it comes to returning to growth for their mobile gear, getting totally cut out of China will make returning difficult. This is clearly a political reaction to the bans Chinese vendors have faced in western markets.” he continued.
“If China does go ahead and completely ban Ericsson and Nokia, Nokia’s CEO Justin Hotard, might get his wish of Huawei and ZTE being fully banned in Europe,” Schoolar said.
Further down the road, this could lead to a technology split in 6G, the analyst noted.
If western vendors are locked out of China, and Chinese vendors are locked out of western countries, there is less incentive for them to work together, said Schoolar. “We could see a return to the days of different standards based on region like we had during the 3G era.