Huawei Loses a Key Customer for 5G Network

SoftBank Group Corp.’s Japanese telecom unit selected Nokia Oyj and Ericsson AB as vendors for its next-generation wireless network, excluding long-time supplier Huawei Technologies Co.

SoftBank Corp. named Nokia as a strategic partner for 5G rollout and Ericsson as a supplier of radio access network equipment, the companies said in separate releases. Huawei, which together with ZTE Corp. was a 4G vendor for the Japanese company, wasn’t selected despite participating in earlier 5G trials. SoftBank declined further comment.

President Donald Trump’s administration has targeted Huawei for months, first encouraging allies to ban the Chinese company’s equipment from their networks and then putting Huawei on an export blacklist that prohibits it from buying American software and components. Australia and New Zealand have prohibited Chinese gear from their networks, while Japan has said it will exclude equipment with security risks without making an official decision on Huawei. Local media have reported the country’s top three carriers — NTT Docomo Inc., SoftBank and KDDI Corp. — will shun Huawei and ZTE.

“You can also expect Docomo and KDDI to follow suit,’’ said Masahiko Ishino, an analyst at Tokai Tokyo Research Center. “So SoftBank isn’t going to be at a cost disadvantage.’’

The phone companies are also scrapping plans to sell Huawei handsets as the impact of a U.S. supply ban spreads. The Chinese company didn’t immediately respond to a request for comment.

So far, few carriers have actively decided against choosing Huawei for new networks. In March TDC A/S, Denmark’s biggest phone company, chose Ericsson to build its 5G network rather than Huawei, its existing supplier.

Read More: Nokia CEO Says It’s ‘Winning Big’ on 5G After Early Stumble

The U.K.’s BT Group Plc announced plans to remove Huawei gear from the core of its mobile network soon after the head of Britain’s foreign intelligence agency MI6 said the U.K. warned about the risks of using Chinese equipment. Taiwan already bans Chinese telecom equipment.

At an earnings briefing in February, SoftBank Group Chief Executive Officer Masayoshi Son said it would cost about 5 billion yen ($46 million) to replace existing Huawei gear in its network. At the time, Son said the company is considering all options for 5G equipment.