Vodafone works on 5G roadmap after Huawei ban

Company prepares to make decision on vendors

Vodafone CEO Inaki Berroeta.

Vodafone CEO Inaki Berroeta.

Credit: VHA

Vodafone Hutchison Australia (VHA) expects to make a decision on vendors for the radio access network (RAN) portion of its 5G rollout by Q2 2019 at the earliest.

The telco currently uses Huawei equipment for the 3G and 4G RAN components of its mobile network. The federal government in August last year revealed that after advice from intelligence agencies it had issued a direction to telecommunications carriers regarding the rollout of 5G. That direction barred Australia’s mobile network operators from using Huawei equipment in their 5G networks.

The government’s decision drew a furious response from VHA, which said the prohibition created uncertainty for mobile network operators’ investment plans. VHA’s chief strategy officer, Dan Lloyd, said the telco would have to “consider what it means for our business.”

Huawei was also a supplier for Optus’ 4G network. Following the ban the Singtel subsidiary has indicated it will pursue a “multi-vendor” 5G rollout, sourcing equipment from both Ericsson and Nokia. Telstra has been working with Ericsson on its rollout of the new wireless standard.

VHA in late 2018 initiated a request for proposal (RFP) process and has yet to lock-in vendors. Once a decision is made “VHA will then formulate its future RAN investment plan optimising and balancing its existing network assets with the costs and benefits of upgrading to 5G,” states a document issued today by Hutchison Telecommunications Australia (HTA) – which owns 50 per cent of VHA – as part of its half-year results reporting.

In May last year, VHA launched the first of five 4.9G sites that it says are helping lay the groundwork for its 5G rollout. The telco also formed a joint venture with TPG that picked up a significant amount of 5G spectrum.

Vodafone has said that joint venture will not terminate even if a proposed merger with TPG fails to proceed due to regulatory barriers or a failure to garner shareholder approval.

The proposal is still being considered by the Australian Competition and Consumer Commission, which has indicated concern that the deal may prevent TPG’s emergence as a fourth mobile network operator in Australia. Since the ACCC detailed its qualms about the merger, TPG has ditched its mobile network rollout.

“If we’re going to continue to see consumers benefit from improved technology and better value plans, there needs to be an even stronger third player with the scale to increase investment,” VHA CEO Iñaki Berroeta said today.

“With the next generation of mobile network just around the corner, there’s never been a more important time to ensure Australia has effective 5G mobile competition.”

VHA today revealed revenue of $3.65 billion for the 12 months to 31 December, up 5.5 per cent on the prior year. EBITDA grew 13.4 per cent to $1.1 billion. The telco’s losses dropped 30 per cent year-on-year to $124.4 million, down from $177.8 million (without AASB 15 accounting adjustments, the 2018 loss would have been $103.4 million).

“Despite the loss position, we’re proud to continue to invest heavily in our network and great value plans, and it’s especially pleasing that over 6 million customers are now enjoying the VHA mobile network,” said acting CFO Sean Crowley.

“In 2018, we added 211,000 customers to our mobile base, with growth driven by increases in postpaid, prepaid and MVNO partner segments.”

The telco also has 33,000 fixed-line broadband customers.

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Tags VodafoneTelecommunicationsVodafone Hutchison Australia (VHA)5G

More about AustraliaAustralian Competition and Consumer CommissionHuaweiHutchisonNokiaOptusSingtelVHAVodafone

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