As the European Union (EU) pushes a plan to remove Chinese telecoms equipment such as Huawei and ZTE from networks, an analysis said European operators' replacement costs could reach up to 40 billion euros (about 67 trillion won). It also warned that if Chinese vendors exit the market, it could be reshaped around Ericsson and Nokia, raising equipment prices and delaying telecoms infrastructure investment.

On July 23 (local time), blockchain media outlet Cryptopolitan reported that GSMA Intelligence released a report saying European telecoms operators could bear costs of up to 40 billion euros if the EU mandates removal of telecoms equipment from high-risk countries. The report was commissioned by seven major European telecoms operators including Deutsche Telekom, Vodafone and Orange.

The estimate is more than three times the 10 billion to 13 billion euros previously presented by the European Commission. That is because earlier estimates reflected only mobile network replacement costs, while this analysis also includes transport networks and fixed broadband equipment.

The report estimated 16 billion to 22 billion euros would be needed for new mobile base stations and related equipment replacement, 9 billion to 12 billion euros for transport network equipment linking data between base stations, and about 5 billion euros for fixed broadband equipment including optical access gear.

The EU is pursuing a plan, through revisions to its cybersecurity law, to mandate removal of equipment from high-risk country suppliers such as Huawei and ZTE from member states' telecoms networks. The report said the measures could be the biggest structural change in Europe’s telecoms industry in decades.

If Chinese vendors leave the market, the analysis said there would effectively be only Ericsson and Nokia to replace them, making reduced competition and higher prices unavoidable.

The report forecast that excluding Chinese vendors could lift mobile telecoms equipment prices by an average 24 percent, fixed broadband equipment by 19 percent and transport network equipment by about 10 percent. It estimated that if Huawei and ZTE volumes are concentrated in specific suppliers, the rise in mobile equipment prices could widen to as much as 43 percent. In that case, operators’ additional investment burden from 2027 to 2030 was estimated at about 8.5 billion euros, and about 24 billion euros through 2035.

Huawei currently accounts for about 25 percent of the EU mobile telecoms equipment market, and the share is about one-third including ZTE. In the fixed network market, the two companies' combined share is about 40 percent. If they leave the market, the report forecast Ericsson’s share of mobile equipment would rise to about 60 percent, and the combined share of Ericsson and Nokia would reach about 96 percent. Nokia’s fixed broadband market share could also expand to around 50 percent from about 30 percent currently, it said.

The report warned that rising replacement costs could lead operators to delay or scale back investment in network upgrades. It said Europe’s digital infrastructure investment gap, already estimated at about 205 billion euros, could widen further.

Differences among member states over the policy are also continuing. Germany and Spain are raising concerns that an EU-wide blanket removal of Chinese equipment could trigger retaliatory steps by China and also raise the cost of building AI infrastructure. China’s foreign ministry also warned that if Chinese companies face discriminatory treatment it would take measures, under relevant regulations, to protect their legitimate rights and interests.

The German government is also stressing balance between security and industrial competitiveness. Katherina Reiche (카테리나 라이헤), Germany’s economy minister, said it is necessary to respond to China’s unfair competition, but Germany must also continue to guarantee exports by German companies to China.

The industry sees the EU policy to remove Chinese telecoms equipment as capable of affecting supply chain realignment, telecoms infrastructure investment and the cost of building AI infrastructure, and considers coordination among member states to be a key variable going forward.