FRANKFURT/PARIS—Huawei faces fresh challenges in Europe after Germany’s Deutsche Telekom announced it would review its vendor strategy and Orange said it would not hire the Chinese firm to build its next-generation network in France.
The shift by the national market leaders, both partly state owned, follows Huawei’s exclusion on national security grounds by some U.S. allies, led by Australia, from building their fifth-generation (5G) mobile networks.
U.S. officials have briefed allies that Huawei is ultimately at the beck and call of the Chinese state, while warning that its network equipment may contain “back doors” that could open them up to cyber espionage.
The Deutsche Telekom review comes as U.S. regulators scrutinize the proposed $26 billion takeover by its T-Mobile US unit of Sprint Corp which is controlled by Japan’s Softbank.
Softbank, which is days away from listing its wireless unit in Tokyo, plans to replace its 4G network equipment from Huawei, Nikkei has reported.
“We don’t foresee calling on Huawei for 5G,” Orange CEO Stephane Richard told reporters in Paris. “We are working with our traditional partners—they are Ericsson and Nokia.”
Richard said the security concerns were legitimate: “I absolutely understand that all of our countries, and the French authorities, are preoccupied. We are too.”
Economy Minister Peter Altmaier, in an interview with Reuters on Dec. 14, said “each product, each device must be secure if it is going to be used in Germany.”
Responding, Huawei said it was not a supplier to Orange’s existing 4G network in France and would not feature in the company’s 5G plans in France. Huawei does supply Orange’s networks outside France and expects to be involved in 5G there, it said.
Huawei has come under intense scrutiny as countries including Australia, New Zealand and Japan follow U.S. moves to restrict access to their markets, citing security concerns that its technology could be used by Beijing for spying.
In an April report, the U.S.-China Economic and Security Review Commission, a Congressional group, pointed to extensive ties between Huawei and the Chinese Communist Party. Huawei founder Ren Zhengfei was a former director of telecoms research in the Chinese military’s General Staff Department.
Ren’s daughter, Meng Wanzhou, was arrested in Vancouver, Canada, on Dec. 1 at the request of U.S. law enforcement. She is accused of engaging in activities to skirt U.S. sanctions on Iran, and faces extradition to the United States.
