Deutsche Telekom under pressure after reports on Huawei reliance

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The German operator strengthened its strategic relationship last year despite growing defiance toward the dominant Chinese 5G vendor.

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Europe’s largest telecom operator Deutsche Telekom faces political pushback in Germany over new reports about its close relationship with Chinese 5G vendor Huawei.

The German operator strengthened its strategic relationship last year despite growing defiance toward the dominant Chinese 5G vendor, POLITICO reported Monday. The two companies also closed a deal that included a commitment from Huawei to shoulder the burdens and costs of U.S. security measures taken last year.

German paper Handelsblatt wrote Tuesday that the operator had maintained significant ties with Huawei in several strategic projects in past years, including its 5G rollout announced last April and June — prompting reaction from German lawmakers.

“Telekom needs to clarify, it owes us parliamentarians an explanation,” Social Democrat lawmaker Bernd Westphal told Handelsblatt after the reports came out.

Conservative lawmaker Thorsten Frei told the paper: “It would be very problematic if there is indeed a high degree of dependence of Telekom on Huawei in expanding the 5G network.”

In a statement, the company said that “thanks to our multi-vendor strategy, there is no dominant supplier for the entire network” and that it is relying on its suppliers Huawei and Swedish competitor Ericsson for 5G antennas for technical reasons.

“Fact is that the sales of Deutsche Telekom with Huawei have been declining in the last 3 years,” it said, adding that it was “moving out Chinese vendors in the mobile communications core network.”

The company procures equipment from Huawei for its cloud services and different parts of the network.

The criticism in Germany goes beyond Deutsche Telekom’s corporate decisions. Several politicians slammed the German government — namely Chancellor Angela Merkel and close confidant and Economy Minister Peter Altmaier — for failing to hold the operator to account.

In past months, the German government has postponed proposing a new IT Security Law — which is the second of two pieces of legislation needed to impose tougher security rules on operators and vendors. It is likely to force Deutsche Telekom to decrease its reliance on Huawei equipment in future telecom networks.

The delay on the legislation is “a huge problem,” Falko Mohrs, a lawmaker from the Social Democrats — the junior coalition partner of Merkel’s conservatives — told POLITICO. Operators in Germany in past months struck deals with vendors for equipment to roll out initial 5G networks across the country.

“We need to set the ground rules faster,” Mohrs said.

He added that he expected the government’s proposal to reach parliament in coming weeks and for MPs to pick it up after summer recess in September. “By the end of the year we should be able to find a solution,” he said.

That timing puts Germany behind other major European countries in drafting new 5G security rules. France, Italy, the Netherlands and others have already imposed new restrictions.

Several EU countries sped up work in past weeks on implementing recommendations in the EU’s 5G security “toolbox” agreed in January. Capitals agreed to inform each other and the EU on measures taken by end-June — a deadline that slipped slightly due to the coronavirus pandemic. A joint report on 5G security measures is expected mid-July.

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