The stakes of the 5G law. A study shows that Huawei would lose billions of euros if excluded from the Romania market

The Chinese company Huawei would lose 2.7 billion euros if it were excluded from the Romanian telecommunications market with the implementation of the 5G law, according to a study commissioned by the company, conducted by the law firm Dentons and the consulting firm Audytel.

According to the report, which presents an extremely black scenario, not only Huawei would lose money, but also the other communications companies, which will have to replace the current equipment manufactured by Huawei.

The study, quoted by HotNews, identified a number of possible economic effects if the current 5G bill is adopted in its current form:

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1. The Romanian mobile market is facing a combined investment of 4 billion euros in the launch of the 5G network in the next 5 years.
2. Huawei, if it were excluded from deliveries to the Romanian market, would suffer a combined loss of over 2.7 billion euros over 10 years, most of which results from unrealized sales of goods and services.
3. Huawei’s ban on deliveries to the Romanian market under the bill would cost the local telecommunications industry between 2.7 billion euros and 4.2 billion euros over a 10-year period.
4. The first negative impact of the bill for network operators will be the forced replacement of all their current equipment manufactured by Huawei in just 5 years, which would cost them 735 million euros in Capex (purchase of new equipment) and Opex (replacement services).
5. In the absence of deliveries from Huawei, the prices of 5G network equipment from other suppliers would increase by 20% due to low competitive pressure.
6. Increasing the cost of 5G equipment means additional costs for mobile operators totaling more than € 412 million (including increased maintenance costs).
7. In addition, Romanian mobile operators would pay an additional approximately 96 million euros for the increased energy consumption of non-Huawei devices.
8. Due to the competitive pressure of the mobile market, mobile operators would prefer to spread their investments in 5G over longer periods of time, in proportion to the increase in equipment prices, which would mean a longer launch period of about 14 months.
9. The longer launch period of the 5G network would impede its accessibility, which would inevitably delay the adoption of this new technology among subscribers, which in turn would reduce operators’ revenues by € 1.4 billion over 10 years.
10. Any further delay in the launch of the 5G network will affect the operator’s revenue and, moreover, it would lead to a loss totaling more than EUR 4.2 billion if the period of market uncertainty exceeds 24 months.

The study also states that a scenario should not be ignored in which the position of the State Treasury may worsen due to the rather real threat of multiple cases of damages brought forth before international arbitration tribunals by those subjects whose interests are adversely affected by the bill, and coming from non-EU countries, are protected by Bilateral Investment Treaties with Romania. In particular, a solid basis for damages could be the Romania-China Bilateral Investment Treaty, which could be a tool for Huawei’s recourse to international arbitration.

Translated from Romanian by Service For Life S.R.L.