--Vodafone Group expects a EUR200 million hit amid plans to remove Huawei equipment from the core of its EU networks

--CEO Nick Read said the company is closely engaged with European governments regarding Huawei

--Huawei will continue to be an important supplier in nonsensitive parts of Vodafone's networks

 

By Adria Calatayud

 

Vodafone Group PLC (VOD.LN) said Wednesday that it anticipates a hit of around 200 million euros ($221.0 million) as it plans to remove equipment made by Huawei Technologies Co. from the core of its networks in the European Union.

Nick Read, chief executive of the U.K. telecommunications group, said Vodafone has decided to replace Huawei in areas deemed sensitive across the EU within five years, following a similar move in its U.K. network last year.

The plan follows an EU recommendation to member states last week to restrict high-risk equipment from sensitive parts of 5G networks and a decision by the U.K. government to allow Huawei to build parts of its next-generation cellular network, despite calls from the Trump administration to ban the Chinese telecom-equipment vendor.

"We are closely engaged with European governments on the Huawei question," Mr. Read said.

The Chinese company will continue to be an important supplier to both Vodafone and the overall telecom industry in the nonsensitive radio-access network, Mr. Read said in a call with analysts after Vodafone released its results for the third quarter of fiscal 2020.

Vodafone will have limited exposure to the U.K. decision to limit the role of Huawei in the country's 5G networks as it is already in compliance with the measure, Mr. Read added.

Rival BT Group PLC (BT.A.LN) last week warned that it expected to book 500 million pounds ($650.6 million) in extra costs over five years on the back of the U.K. government's decision.

Furthermore, Mr. Read said Vodafone's new European tower-asset company will be incorporated in Germany and based in Dusseldorf. The business is on track to start operating in May, as Vodafone prepares a potential initial public offering in early 2021 and explore the monetization of several individual markets in parallel, Mr. Read said.

Vodafone said it has appointed Thomas Reisten, who is currently chief financial officer of its Africa, Middle East and Asia Pacific operations, as CFO of its European tower company. In November, the company named Vivek Badrinath as CEO of the tower business.

Vodafone also said its in discussions with Deutsche Telekom AG (DTE.XE) on an active sharing agreement for parts of their networks in Germany.

 

Write to Adria Calatayud at adria.calatayud@dowjones.com

 

(END) Dow Jones Newswires

February 05, 2020 07:39 ET (12:39 GMT)

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