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Huawei loses key 5G contract in Japan to Nokia and Ericsson

Huawei loses key 5G contract in Japan to Nokia and Ericsson
A Huawei research and development engineer works on a device at a company facility in Shenzhen, China, on April 12. (Kevin Frayer / Getty Images)

SoftBank Group Corp.’s Japanese telecom unit has selected Nokia and Ericsson as vendors for its next-generation wireless network, excluding longtime 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 Wednesday. Huawei, which together with ZTE Corp. was a 4G vendor for the Japanese company, wasn’t selected despite participating in 5G trials. SoftBank declined to comment further.

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President Trump 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 effect of a U.S. supply ban spreads. The Chinese company didn’t immediately respond to a request for comment.

On Wednesday, Huawei announced it was seeking to expedite a federal court case in Texas challenging the Trump administration’s decision to bar the U.S. government and its contractors from using its equipment. The company said the ban was threatening its business in more than 170 countries.

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

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

In the U.S., the Trump administration’s ban could hit rural telecom companies hard because many rely on Huawei’s cheaper equipment to maintain and build out their networks.

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

Alpeyev and Hyuga write for Bloomberg. The Associated Press and Times staff writer Laurence Darmiento contributed to this report.

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