European telcos may get more time to phase out high-risk suppliers under EU proposal

European Telcos Could Receive Extension to Replace High-Risk Suppliers

EU Proposal on Phasing Out High-Risk Telecom Suppliers

By Foo Yun Chee

Background and Commission Proposal

BRUSSELS, Sept 29 (Reuters) - Europe's mobile telecoms ​operators could get more time to phase out equipment from suppliers deemed high risk, according to a proposal by EU governments seen by Reuters, after the sector complained replacement could reach €40 billion ($45 billion).

The European Commission proposed in January that components and equipment from high-risk suppliers be phased out from critical sectors as part of its overhaul of the EU Cybersecurity Act, a move that would mainly affect Huawei and other Chinese technology companies.

Proposed Timeline and Security Concerns

It suggested a 36-month phase-out period for mobile operators. Europe has tightened scrutiny of Chinese technology following cyber and ransomware attacks and amid growing concerns about foreign espionage.

Changes by EU Governments

But EU governments removed the deadline from the Commission's proposal, according to a document dated September 22 seen by Reuters.

Criteria for Phase-Out Period

Instead, they said the phase-out period should depend on factors including the level of risk identified, product and infrastructure lifecycles, equipment replacement cycles, interoperability requirements and the availability of suitable alternatives.

Huawei's Response

Huawei denies its equipment poses a security risk.

Next Steps in Legislation

EU countries must now negotiate the Commission's proposal and any amendments with EU lawmakers before the revised Cybersecurity Act can become law.

Impact on Major European Markets

According to a February research note by Strand Consult, the largest share of equipment due to be replaced over the next five years is in Germany, Italy and Spain, with Deutsche Telekom and Vodafone heavily reliant on Huawei equipment in some markets.

Industry Concerns Over Costs

In a joint letter earlier this month, Deutsche Telekom Chief Executive Timotheus Höttges and 16 industry peers said replacement costs of up to €40 billion risk draining capital needed for fibre, 5G and 6G investments.

($1 = 0.8826 euros)

(Reporting by Foo Yun Chee. Editing by Mark Potter)