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Ericsson and Nokia halt Russia business. Is Huawei next?

Ericsson and Nokia halt Russia business. Is Huawei next?


London
CNN Business

Nokia announced its exit from Russia, while rival Ericsson suspended business there indefinitely, raising doubts about the country’s ability to build ultra-fast 5G networks.

The Finnish telecoms company announced on Tuesday that staying in Russia “would not be possible” given President Vladimir Putin’s ongoing assault on Ukraine.

“Over the past weeks, we have suspended deliveries, halted new business and moved our limited research and development activities outside of Russia,” Nokia said in a statement. “We can now announce our exit from the Russian market.”

This makes China’s Huawei the only third global provider of 5G networks still active in the country.

Western governments have imposed several rounds of sanctions on Russia since the invasion, including restrictions on imports of high-tech into the country.

But they stressed the need, on humanitarian grounds, to maintain working communications networks to enable Russians to access information from abroad.

Nokia (NOK) said it will aim to “provide necessary support for network maintenance” and that it is applying for licenses to ensure compliance with the sanctions.

Meanwhile, Ericsson (Eric) said Monday that it will suspend its business in the country indefinitely and put its workers on paid leave. It had already halted all deliveries to customers in Russia in late February.

Western companies left their business in Russia in droves after the invasion began in late February. Russia now faces the daunting task of building domestic alternatives to Western products and services, possibly with the help of Chinese suppliers.

This mission could extend to the next generation of the Internet. Nokia and Ericsson are the world’s largest providers of 5G mobile networks – the high-speed internet that will power a host of future technologies.

Over the past four years, companies have launched the largest number of commercial and experimental 5G networks globally — Ericsson launched 216 networks and Nokia 200 — according to Kagan, a data provider owned by S&P Global Market Intelligence. The Chinese company Huawei came in third place with 75 launches.

All three sellers are important to Russia: Huawei and another Chinese company, ZTE (ZTCOF), provide between 40% and 60% of wireless network equipment for Russia, while Nokia and Ericsson provide the rest, the Financial Times reported, citing data from telecom research firm Dell’Oro Group.

In November, Nokia said it was entering into a joint venture with Yadro, a Russian data storage developer, to build 4G and 5G telecom base stations in Russia. A Nokia spokesperson confirmed to CNN Business that this project has now been cancelled.

Recent reports point to Huawei – which supplies 5G Networks To Russia’s largest mobile operator MTS – can follow its European competitors in stopping new business.

Forbes reported on Tuesday that Huawei forced some employees of its Russia offices to take a month off after it suspended new orders, citing three sources close to the matter. A source told the newspaper that the company feared that it would be exposed to Western sanctions if it did business in the country.

But Huawei, which continues to fight for survival after US sanctions severely limited its access to key technology, has so far been silent, except to call for peace in Ukraine.

In response to a question about sanctions against Russia at an earnings conference in March, Huawei’s rotating president, Guo Ping, said: “Just like all of you, we hope to see a ceasefire and an end to the war as soon as possible. We believe that wise leadership will put an end to This crisis will soon, and normal life will be restored.”

CNN’s Sharon Brown-Peter, Chris Liakos, and Michelle Toh contributed to this report.

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