- Eliminating Huawei could cost Europe up to €40 billion, GSMA estimates
- GSMA expects reduced competition to significantly increase telecom equipment prices
- Experts disagree on true financial impact of removing Huawei
The European Union’s plan to eliminate supposedly high-risk telecoms providers such as Huawei and ZTE could cost much more than Brussels currently estimates, according to new figures.
Trade body GSMA has said direct replacement costs would reach between €30 and €40 billion, around four times more than the European Commission’s own estimate of between €10 and €13 billion in total.
According to the Commission’s own projections, the transition from Chinese equipment would cost between 3.4 and 4.3 billion euros annually over a three-year deployment; That annual estimate equates to a total cost of approximately €10 billion to €13 billion once the full three-year period concludes.
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The pressure to remove Huawei and ZTE from European networks dates back to security concerns raised in the early 2010s.
Several EU governments began restricting Chinese suppliers after the United States pressured its allies to exclude them from next-generation 5G infrastructure.
The debate intensified further when several member states moved to completely ban Chinese equipment from their national 5G core networks.
The European Commission subsequently proposed a formal ban on high-risk vendors as part of a new EU Cybersecurity Law that is now under active negotiation.
The GSMA €30-40 billion figure is a single total and breaks down into fixed networks at €5 billion and transport networks at €9-12 billion.
It also projects an additional €8.5 billion in costs between 2027 and 2030 due to less competition among equipment manufacturers, a cost that the Commission’s figures do not appear to include.
GSMA attributes that additional expense to fewer companies competing for contracts once high-risk suppliers are completely excluded from the market.
Telecom operators across the bloc have already begun lobbying regulators for financial compensation linked to mandatory equipment replacement.
Experts disagree on whose exact numbers are
Some economists question the GSMA figures, arguing that the estimates do not separate new costs from expenses that would have occurred anyway.
“The GSMA estimates are crude, not incremental,” said Hosuk Lee-Makiyama, director of the ECIPE think tank.
He argued that subtracting replacement costs that would have occurred anyway would bring the totals closer to the Commission’s own figures.
Lee-Makiyama’s critique suggests that the true gap between industry and Commission estimates may be smaller. The European Commission had not responded to requests for comment on the dispute.
The GSMA report comes as negotiations on the Cybersecurity Law continue between EU member states and representatives of the telecommunications industry.
Any potential compensation plan would likely require an agreement between national governments, which are already divided over how quickly to eliminate Chinese suppliers.
This is not the first time that GSMA figures have contrasted sharply with estimates from the European Commission or individual analysts.
In 2019, GSMA projected that replacing Chinese-made telecommunications equipment across Europe could cost up to €55 billion in total.
Strand Consult, by contrast, estimated the cost of replacing Huawei or ZTE equipment eligible for 5G upgrades at around $3.5 billion.
Whether the final cost this time is closer to Brussels’ modest estimate or the GSMA’s much higher figure remains a truly unresolved question for now.
Via Politico
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