As Western governments push through with their decision to restrict tech giant Huawei access to their market, Australia's TPG Telecom is the latest to join the fray. Huawei is facing a handful of lawsuits over technology theft as well as spying on its customers, allegations that the Chinese tech giant continues to deny to this day.
On Tuesday, Australia's TPG Telecom announced that it had put a stop on the construction of its mobile telephone network. The main reason behind this decision has something to do with the primary supplier of most of its hardware, Huawei. All hardware products manufactured by Huawei Technologies have been banned by the Australian government citing security reasons over this decision.
TPG Telecom stands as the first commercial company to bear the brunt of Australia's decision to follow suit in an international effort to restrict Huawei's access to most government projects. The main reason behind this is allegations that Huawei has the potential to use its equipment for espionage, an allegation which the company denied from the very beginning.
Huawei has been widely held as the world's biggest manufacturer of telecom products. The company has been under heavy scrutiny following the arrest of its Chief Financial Officer Meng Wanzhou in Canada last December 2018.
On Monday, the United States Justice Department officially filed cases against the embattled Huawei executive. Huawei is also facing lawsuits over an alleged conspiracy to steal trade secrets from T-Mobile U.S., as well as bank fraud.
Following TPG Telecom's decision, Huawei issued a statement describing the announcement as "extremely disappointing."
In an emailed statement, Huawei said, "The Australian government's 5G ban on Huawei will lead to reduced competition and higher prices for Australian consumers and business."
Following its announcement, TPG Telecom share price hit a six-week high. On the other hand, the cancellation of its contract with Huawei has cost TPG Telecom around $72 million. Nevertheless, many observers have noted that it will not hurt TPG's business in the long-term since the company has already signed a massive deal with Vodafone Group.
Vodafone previous used 4G equipment provided by Huawei on its projects in Australia. Because of the recent announcement, the company will no longer utilize Huawei-provided equipment for its planned 5G network in Australia.
TPG Telecom agreed to a merger with Vodafone in August 2018. The merger was seen as part of the effort to challenge TPG's rival in Australia which is Optus and Telstra.
