Balkan telecoms and media company United Group is considering switching parts or all of the Huawei equipment that dominates its infrastructure to alternative providers, as it seeks to align itself with the United States government.
European governments have tightened controls on Chinese-built 5G networks following pressure from Washington, which alleges Beijing could use Huawei equipment for spying. Huawei has denied being a national security risk.
United, owned by private equity firm BC Partners, operates in several countries such as Bulgaria, Croatia, Slovenia, Greece and Serbia providing a range of services, including mobile, cable TV, broadband internet and fixed telephony.
Many mobile operators in the eastern and south eastern Europe had traditionally used Huawei gear to build up their networks as they were considered cheaper than the likes of Nokia and Ericsson.
“I think a gradual and measured switch to something that is more U.S.-approved is the right approach, and it’s one that we’re considering,” United Chairman Nikos Stathopoulos said.
But, switching mobile network equipment from one vendor to another usually means ripping out existing gear which takes time and costs money.
“We cannot ignore their wishes but, in an ideal world, we should also receive financial help (from governments) for switching to new infrastructure, as it will cost us millions of dollars to do so,” said Stathopoulos, who is also a partner at BC Partners.
Despite setbacks, Huawei retained its pole position with a 31% market share of global telecom equipment revenue in 2020, according to market research firm Dell’Oro.
“In the past years, we had good cooperation with the United Group, and we hope we will continue this cooperation in the coming years,” a Huawei spokeswoman said.
Founded in 2000, United Group had one of the broadest network coverages in the Balkans. After BC Partners took over the company in 2019, it expanded by buying more companies and more than doubled its EBITDA to 665 million euros.
Stathopoulos expects further acquisitions as part of United’s plan to grow faster through market consolidation.
While BC Partners has no immediate plan yet to exit its investment, Stathopoulos thinks a stock market listing could be on the cards.
“I think an IPO (initial public offering) is a more likely exit route for us, because there are not many other public companies like United Group in Europe,” he said.