British telecommunications firm BT Group has expressed concern over the possible repercussions of the UK's decision to restrict Huawei Technologies' access to the country's mobile broadband infrastructure. The company estimates that it could stand to lose over $650 million over the next five years as a direct result of the restrictions.
The company's CEO, Philip Jansen, mentioned in a statement on Thursday that they are currently reviewing the British government's guidance as a way to gauge its impact on their operations. BT Group currently considers Huawei as one of its largest suppliers for telecommunication network equipment. Huawei also supplies roughly 44 percent of the entire country's fiber-optic components.
The UK's decision to restrict Huawei's access also managed to drag down BT Group's share prices, which had already dropped following the release of the company's worse-than-expected third-quarter profits. Analysts have pointed out that investors are expecting a decline in the company's overall performance in the coming quarters as it loses its largest supplier.
For its latest quarter, BT reported adjusted earnings before interest, tax, depreciation, and amortization of £1.98 billion. This is slightly below the average estimates of £2 billion for the quarter. The worse-than-expected figures were mostly attributed to the company's underperforming information technology services unit.
British officials announced their decision on Tuesday, effectively banning Huawei's equipment from being used to build the country's core wireless networks. The government also capped Huawei's market share in the UK's 5G network to a low 35 percent. In line with its new policy, carriers operating in the country have been given up to three years to make the necessary changes.
Prior to the decision, BT Group had already started removing Huawei-made components from its core EE mobile networks. With the new policy, the company now has to rely on getting its components from other international suppliers such as Nokia.
During the company's earnings call, Jansen revealed that substantial spending will be necessary to transition to non-Huawei equipment. The bulk of the cost will be centered on switching Huawei-made 4G kits to similar equipment from other suppliers. Further spending on installing 5G components on top of the company's existing antennas will then follow this.
Jansen clarified that the company's overall targets for 2020 will remain the same despite the added costs. The executive expressed confidence in the company's ability to manage the added costs. Jansen also touched on the topic of Britain's ambitious goal of providing fiber-optic broadband to the entire country during the earnings call. He stated that the country's goal to transition to full fiber by 2025 is possible, but it will be very difficult given the recent ban.
