Thread by @JPKleinhans

Why don't we talk about the 𝗖𝗢𝗦𝗧𝗦 of replacing #Huawei gear in EU?

Both @BTGroup and @VodafoneGroup talked about it in their latest financial reports to investors.

theguardian.com/business/2020/…

Let's have a look... [THREAD]

The BT Group estimated in their latest financial statement that the UK's 5G requirements will have "an impact of around £500 million over the next 5 years."

btplc.com/Sharesandperfo…

This got widely reported without putting it in context. Let's put that "£500 million over 5 years" in context:

BT Group's Capital Expenditure per year (ONLY network investments):
2017 = £1650 million
2018 = £1728 million
2019 = £2083 million

btplc.com/Sharesandperfo…

Let's assume BT continues to invest ~£2000 million/year for the next 5 years. An additional £100 million/year for replacing Huawei gear in the UK to get below the required 35% barely makes a dent. We essentially talk about a ~5% increased CAPEX for network investments.

What about @VodafoneGroup? They mentioned in their quarterly reporting that removing "high risk suppliers from EU core over the next 5 years" would cost €200 million.

investors.vodafone.com/static-files/4…

€200 million over 5 years = €40 million / year

Let's put that into perspective...

Vodafone's Capital Additions (w/o spectrum and licence costs):

2017 = €7675 million
2018 = €7321 million
2019 = €7227 million

investors.vodafone.com/static-files/1…
investors.vodafone.com/static-files/e…

Since @VodafoneGroup, sadly, does not report how much they actually spent on infrastructure we have to guess: for @BTGroup network investments are ~50% of all Capital Expenditures:

2019 = €7227 million * 0.5 = €3613.5 million

So let's assume Vodafone will continue to invest ~€3500 million in infrastructure per year. An additional €40 million / year for replacing Huawei equipment in the EU core networks is, quite literally, nothing.

What's my point?

Both @Telekom_group and @Telefonica will soon release their financial reports and most likely will talk about higher costs due to EU's 5G toolbox. Let's make sure to provide some context to those numbers... 🧐😉

Last point (promise), those numbers also make clear how fundamentally wrong GSMA's "€55 billion" estimate from last year was.

reuters.com/article/us-hua…

For a much more sound cost analysis check out strandconsult.dk/sw8402.asp