Spanish Carrier Orange Puts Hard Conditions on Huawei as European Telecoms Navigate Regulatory Pressure
Major European telecommunications operators are increasingly caught between commercial interests and evolving regulatory policies regarding Chinese technology providers. In Spain, telecommunications carrier Orange has introduced a strict condition for any future agreements, demanding that Huawei automatically refund the net book value of all hardware and software that must be removed if political decisions force the equipment out of service.
Under this proposed term, the refund would take effect immediately upon a ban without requiring further negotiations over compensation amounts. This contractual stance illustrates the dilemma facing European operators, who recognize the financial value and maturity of equipment from Chinese manufacturers like Huawei and ZTE, yet must account for the heavy financial exposure associated with potential policy shifts.
Regulatory pressure has intensified across Europe following the European Commission’s release of a Cybersecurity Act revision draft in January. The proposal mandates that member states exclude high-risk suppliers from 18 critical sectors, including 5G communications, semiconductors, power systems, automated driving, and medical equipment. While the draft does not explicitly name specific countries or companies, external commentary widely interprets it as targeting Chinese firms. If approved, the framework would ban affected vendors from European mobile networks and require operators to complete equipment replacements within 36 months, while also excluding Huawei and ZTE from fixed and satellite networks, though firm timelines for those sectors remain undefined.
In Spain, Huawei equipment currently accounts for approximately 43 percent of Orange’s mobile communication network. At Vodafone’s Spanish operations, Huawei gear represents nearly 70 percent of the network, while Telefónica has not integrated the equipment into its wireless infrastructure. The Spanish government has voiced opposition to the European Commission’s proposed measures and has not formulated independent domestic bans. Nevertheless, if the EU-level framework gains approval, Spanish carriers would face significant financial burdens to replace existing infrastructure.
Independent analyses highlight the scale of the financial challenge. An analysis published by the GSMA in July estimated that replacing Chinese high-risk suppliers across the EU could cost between 30 billion and 40亿元 [euros], contrasting with earlier European Commission estimates projecting cumulative costs of 10 billion to 13 billion euros over three years. Furthermore, the GSMA warned that reduced supplier competition could drive mobile network equipment prices up by roughly 24 percent, fixed network equipment by up to 19 percent, and transport network equipment by 10 percent. These price increases could add approximately 8.5 billion euros in additional network investment costs between 2027 and 2030. Additional research suggests that delayed 5G and future 6G deployments could lead to cumulative economic losses reaching 370 billion euros by 2030.
Technical hurdles have also complicated supplier transitions. Reports indicate that Orange previously partnered with Ericsson in 2024 to adjust its network vendor structure amid regulatory pressures. In the initial phase, ZTE’s 4 percent share of Orange’s network was eliminated, Huawei’s presence decreased from 54 percent to 43 percent, and Ericsson’s share rose from 57 percent, up from 42 percent. However, a planned second phase intended to make Ericsson the sole supplier was halted because Ericsson reportedly failed to meet agreed-upon quality standards. Consequently, Orange has paused bidding processes involving Ericsson, Huawei, Nokia, and Samsung, choosing instead to prioritize direct negotiations with its existing suppliers, Ericsson and Huawei.
