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Summary

At its Global Mobile Broadband Forum event last November, Huawei invited several of its customers to the main stage to talk about their 5G plans. BT, for instance, broadcast a live video over 5G from London's Wembley Stadium. A few days later, however, the same BT was yet another operator to ban Huawei from bidding on its 5G core.

But what is the situation in Latin America? Huawei already has a significant presence in the region, and Ovum believes the region will gain even more importance for the vendor if doors continue to close in other parts of the world.

Geopolitics will force Huawei to rely more than ever on emerging markets

Several countries, including the UK, South Korea, Japan, Australia, and New Zealand, have announced some sort of restriction on the Chinese vendor. Consequently, it is on the back foot in a critical moment, as the industry moves toward 5G and as operators around the globe are starting to place orders for the new equipment.

The misfortunes of Huawei could signal a refocusing on emerging markets, such as Latin America. Huawei is already a powerhouse in the region, and conditions in Latin America could reassure the firm that it is unlikely to encounter there the same difficulties it is facing elsewhere. For starters, many of the region's main telecoms groups are headquartered in countries that have not announced any restrictions on the company, such as Mexico, Spain, Brazil, and Argentina. Second, it would be extremely complex, not to mention expensive, to replace Huawei equipment in existing networks. Huawei is one of the leaders in Latin America, and it has built important portions of the networks of many operators. Third, operators in the region are unlikely to agree to a duopoly in the supply of telecoms equipment, fearing that lower competition would drive prices up and stifle efforts (and regulatory obligations) to expand coverage and quality of the networks.

Ovum expects that Latin America, along with parts of Asia and Africa, will become even more important to Huawei. One can only imagine that Huawei will try even harder to win market share in these regions, where it can try to offset at least part of the losses it will face elsewhere. In theory, operators and governments in Latin America can benefit from this situation by having access to better terms when negotiating with Huawei.

Appendix

Further reading

Latin America is likely to be slow to adopt the new 5G standard, and that's fine, GLB007-000108 (August 2018)

Author

Ari Lopes, Principal Analyst, Latin America

ari.lopes@ovum.com

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