The looming financial impact of the UK government’s ban on the use of Huawei equipment in 5G networks has come to light after the Chinese company revealed declining revenues and profits for its UK unit.
UK telecommunications companies were told last summer that they would be forbidden to buy the Chinese company’s 5G equipment from January 2021 and is expected to withdraw any equipment it had already installed by 2027.
This gave companies such as Vodafone and BT the opportunity to stockpile replacement equipment last year while preparing for a post-Huawei market from 2021 by signing supply contracts with Ericsson, Nokia or companies. smaller actors seeking to fill the gap in the market left by the ban of the world’s largest telecommunications equipment company.
Huawei Technologies, the UK business unit, said revenue in 2020 fell 27% to £ 913million while operating profit, before interest and taxes, fell by a quarter to 36.4 million pounds sterling. Revenue benefited from a £ 26million reduction in expenses during the period due to lower staff and travel costs.
It paid a dividend of £ 90million to its parent company, up from £ 55million in 2019.
The UK business is a relatively small division of the larger Huawei business, which reported 2020 revenue reaching $ 137 billion (£ 97 billion) with operating profit falling to $ 11 billion (£ 7.8 billion) for the year.
The British company nevertheless became a symbol of Huawei’s struggles last year after the British government made a startling turnaround after initially deciding to allow limited use of Huawei’s 5G equipment.
Britain had long been the Chinese company’s gateway to the world, and Huawei had gone so far as to fund a test center, run by the British security services, to reassure government and industry about the safety of its equipment.
Lord John Browne, the former CEO of BP, stepped down as chairman of Huawei Technologies last year. Sir Mike Rake, the former CEO of BT, followed suit in March this year.
Huawei said: “The political decisions have not only had a real impact on our UK business, the people we employ and our customers, they will delay the rollout of 5G and put Britain on the slow digital lane. . “
U.S. authorities have led the charge against Huawei, pressuring countries around the world to stop using the company to supply equipment to critical networks. A move to prevent U.S. companies from supplying Huawei meant it was unable to use software for its consumer products, such as Android-based smartphones, and struggled to source chips .
It is likely that the full impact of the UK government’s ban will be evident in the 2021 accounts when the 5G equipment lockdown goes into effect. The Chinese company still has operations in the country providing broadband equipment and has significant research resources in the country. He perseveres with his plan to build a new photonics facility outside Cambridge despite the government ban.
