On the morning of April 3, a plane packed with protective equipment landed at Budapest Airport. A large part of the shipment \u2013 50,000 face masks, 3,000 protective goggles and 3,000 protective clothing \u2013 were donated by the Chinese telecommunications company Huawei.<\/p>\n
From the airport, local senior executives of the Chinese company went to the headquarters of the Ministry of Foreign Affairs and Trade in Bem Square, where Minister P\u00e9ter Szijj\u00e1rt\u00f3 was already waiting for them. His office was in charge of coordinating the procurement of protective equipment and they had constantly publicized the arrival of more and more shipments. However, according to a source familiar with the details of the meeting, Huawei executives had already arranged the meeting with Szijj\u00e1rt\u00f3 well before the donation. The meeting\u2019s purpose was to ask the minister personally whether the Hungarian government’s attitude towards their company had changed. They were interested in whether they could continue to to build telecommunications networks in Hungary without restrictions. The answer they received was reassuring, and Szijj\u00e1rt\u00f3 even posted a Facebook video<\/a> of the meeting thanking Huawei for the donations.<\/p>\n The reason behind the public relations gestures and the concerns of Huawei representatives is the same. In the trade and diplomatic war between the United States and China, the Trump administration is trying to persuade its allies to limit the involvement of Huawei (and the also Chinese ZTE) in the rollout of 5G networks, due to U.S. national security concerns. The Hungarian government has been a supporter and advocate of Huawei (as we discussed in a previous article<\/a>), but during the coronavirus epidemic, skepticism towards China intensified in European governments. Last year, it seemed that several major European countries were trying to resist U.S. pressure and not completely exclude Huawei from building 5G networks, but this situation is no longer clear.<\/p>\n The company that benefited the most from the political uncertainty surrounding Huawei, is Sweden\u2019s Ericsson, with major mobile operators in Britain and Germany dumping the Chinese company for the Swedish<\/a>. While in February Huawei boasted<\/a> that as market leaders, they already had 91 commercial contracts for building 5G networksworldwide, by June Ericsson had overtaken them with 93 agreements.<\/p>\n Huawei’s position in the Hungarian market has weakened as well and now they need the support of the Hungarian government more than ever \u2013 this is the conclusion of a dozen of interviews we conducted with senior officials of telecommunications companies as well as government and diplomatic sources following the debateover Huawei. Based on these conversations, it seems that while German-owned Magyar Telekom and British Vodafone have grown more cautious of Huawei, Telenor Hungary, which is partly owned by the Hungarian state, has no similar reservations.<\/p>\n Huawei responded to Direkt36’s request by saying that they could not comment on 5G supplier tenders (meaningwhich mobile operators contracted them, or at least who they applied for). However, Mariann Gecse, Directorof Government Relations and Communications at Huawei Technologies Hungary emphasized that \u201cVodafone launched the first commercial 5G service in Hungary last October with Huawei devices.\u201d The Ministry of Foreign Affairs and Trade and the Ministry of Innovation and Technology, which is also responsible for 5G networks, did not respond to our inquiry.<\/p>\n On November 5, 2019 at an economic forum in Shanghai, Foreign Minister P\u00e9ter Szijj\u00e1rt\u00f3 made a statement that shocked players of the Hungarian telecommunications industry. Szijj\u00e1rt\u00f3 stated that in Hungary \u201cHuawei will cooperate with the British Vodafone and Deutsche Telekom\u201d in the rollout of 5G networks.<\/p>\n Szijj\u00e1rt\u00f3 had divulged something that was not even close to certain at the time. In order to build 5G networks, the state must first solicit bids for radio frequencies that are used for communication, and then mobile operators look for vendors to build the system. At the time of Szijj\u00e1rt\u00f3’s announcement, neither the bid solicitation took place nor did Magyar Telekom or Vodafone decide on contracting Huawei as the supplier. Telekom also quickly refuted Szijj\u00e1rt\u00f3’s announcement in a statement.<\/p>\n Senior managers of several telecommunications companies told Direkt36 that they did not believe Szijj\u00e1rt\u00f3 was trying to pressure Hungarian mobile operators to cooperate with Huawei in the deployment of 5G. The minister’s statement was more of a political gesture to China: “in such vendor issues, the Hungarian government cannot influence Vodafone or Telekom, where decisions about whom and how it is worth contracting are made in London or Berlin,\u201d one source said. Since Szijj\u00e1rt\u00f3’s remarks in November, a lot has changed around the rollout of 5G networks, and these developments have rather weakened Huawei’s position in Hungary.<\/p>\n While the whole country was watching the coronavirus epidemic unfold, the rollout of 5G networks in Hungary started to speed up significantly. On March 26, the National Media and Communications Authority, with precautionary measures, held the long-awaited 5G spectrum auction with representatives of the bidding companies wearing face masks. The mobile radio frequency bands on which the Hungarian 5G networks will operate were sold at this auction. Magyar Telekom, Telenor and Vodafone, which won at the auction, will pay a total of HUF 128.5 billion (\u20ac 365.7 million) for these. With the frequencies, companies can embark on the physical development of the network. This work could be carried out by companies such as Sweden\u2019s Ericsson, Finland\u2019s Nokia or China\u2019s Huawei and ZTE.<\/p>\n By far the largest player in the Hungarian market, Magyar Telekom, announced in early April after the auction that it will continue working on the construction of 5G networks with Ericsson, their long-time partner of thirty years. It was a significant turnaround, as last year it looked like Huawei might have a chance to win the contract.<\/p>\n \u201cAt Telekom, these are typically decisions made centrally, in Germany. What to do with Huawei has caused a lot of headache in Berlin,\u201d a former Telekom executive told Direkt36, suggesting that while there is plenty of criticism and political attack on Huawei, the company\u2019s prices are the lowest. \u201cWe had a lot of reservations about China and Huawei, but as we started using more and more of their equipment in the network, it was a market necessity,\u201d the source said.<\/p>\n According to the former executive, Magyar Telekom has not previously had any security incidents related to Huawei devices. The company did not entrust the rollout of their 5G network to Ericsson because it had specific security reservations about Huawei. They chose the Swedish company because of the anti-Huawei campaign of the United States, and because Ericsson had already built Telekom’s 4G network in such a way that it was upgradeable to 5G.<\/p>\n However, the mobile operator that introduced Huawei to Hungarian mobile networks was not Telekom, but Britain\u2019s Vodafone. As the junior player in the market, Vodafone tried to expand rapidly across Europe with Huawei’s cheap and high-quality devices. Vodafone has not only built its 4G network in Hungary using Huawei\u2019s equipment, but also their limited 5G network in Budapest at the end of last year. According to an upcoming report by a Danish analyis company<\/a>, the networks of four European mobile operators are 100 percent based on Huawei’s devices, and one of them is Vodafone Hungary. According to the report, Huawei doesn\u2019t even have such a market share at home in any of China\u2019s mobile operators. But by the second half of 2019, Huawei\u2019s positions at Vodafone\u2019s UK parent company had also weakened.<\/p>\n The British government, after consulting British intelligence agencies, classified Huawei as a high-risk vendor. This was not without effect at Vodafone’s headquarters either. \u201cA decision has been made at the British headquarters that Huawei\u2019s equipment should be replaced in the core network<\/a>, and this also affects the Hungarian network. There will be an open bidding procedure, this must be done,\u201d said an executive of a large telecommunications company in Hungary. The British company has decided that at the core, sensitive parts of Vodafone networks in Europe, the replacement must take place within five years. This is the part of the network (e.g. mobile switching centers) through which all calls and data traffic passes, meaning that theoretically these are the parts where it is the easiest to gain unauthorized access to information.<\/p>\n A central decision has also been made at Vodafone UK \u2013 in line with government regulations \u2013 that a high-risk vendor (practically Huawei and ZTE) \u201ccan only supply up to 35 percent of the radio network and no radio equipment manufactured by them can be placed near critical government buildings and critical infrastructure such as power plants,\u201dsaid a Hungarian executive of a telecommunications company.<\/p>\n Vodafone Hungary told Direkt36 that it was not in a position to reveal which supplier would build their 5G network in Hungary or whether the choice of vendors would be influenced by the decisions made in London, nor did they answer whether a 35 percent cap on Huawei\/ZTE equipments were planned in Hungary as well. At the end of June, Vodafone Hungary officially announced that, after Budapest, they will roll out their 5G network in other large cities and at Lake Balaton, but nothing was said about the vendors. However, a representative from one of the vendor companies revealed that Vodafone\u2019s tender is now underway and claimed that it was a fair competition.<\/p>\n Although Huawei appears to be ousted from Telekom\u2019s 5G network and its position with Vodafone Hungary is also weakened due to the British government and the British parent company\u2019s measures, the third mobile operator of the Hungarian market thinks of Chinese vendors quite differently. Telenor Hungary had previously (when it was still owned by Norwegians) built its 4G mobile network in Hungary with a Chinese vendor\u2019s equipments. Moreover, it was not the privately owned Huawei, but Chinese state-owned company ZTE, which had been closely linked to the Chinese army and had previously been subject to U.S. sanctions<\/a>.<\/p>\n In mid-2018, Telenor Hungary was sold. The company was bought from the previous Norwegian owners by Petr Kellner\u2019s Czech PPF Group. Kellner, who is among the world\u2019s one hundred richest businessmen, earned much of his wealth in China by providing consumer loans. His firm also secretly funded a pro-Chinese PR campaign in the Czech Republic<\/a>, according to Czech journalists. When Telenor Hungary\u2019s deputy CEO Gy\u0151z\u0151 Drozdy, was asked about the difference between the old Norwegian and the new Czech owner in an interview, he highlighted, among other things, that \u201cthis Central European mindset is a much more pragmatic mindset. He sticks less to the principles and tries harder to find the compromise with which the company can be developed and taken forward.\u201d<\/p>\n Originally, a company of L\u0151rinc M\u00e9sz\u00e1ros also bid on Telenor, then in October 2019, Hungarian state-owned IT company Antenna Hungaria eventually bought a 25 percent stake in Kellner’s company, with the majority ownership remaining with the Czechs. According to 24.hu, Prime Minister Viktor Orb\u00e1n and Kellner had already met in person before Telenor was sold by the Norwegian parent company. This was not confirmed to the news site by either party at the time, but Direkt36 was also told by two business sources that Orb\u00e1n and Kellner had indeed met in person and soon established a close, good personal relationship with each other.<\/p>\n Kellner also has telecommunications companies in the Czech Republic, and these \u2013 O2 and CETIN \u2013 have already built their existing infrastructure with Huawei\u2019s equipment. Several market and diplomatic sources told Direkt36 that the Czech majority owner of Telenor Hungary would clearly prefer Huawei to build the 5G network in Hungary due to their Chinese business interests and the old partnership, and the minority owner Hungarian state does not oppose this either. Foreign Minister P\u00e9ter Szijj\u00e1rt\u00f3 has stated several times before that the Hungarian government does not see any national security risk in Huawei, and even last October, at a birthday event of Vodafone Hungary, he praised the cooperation between the British and Chinese companies. “It is in the national interest that Eastern and Western companies can cooperate in Hungary and freely choose partners for their domestic activities,” Szijj\u00e1rt\u00f3 said at the time.<\/p>\n Huawei’s chances were also improved by the fact that Telenor’s former vendor in Hungary, ZTE, is withdrawing from European markets and focusing more on China. Telenor’s Gy\u0151z\u0151 Drozdy replied to our inquiry, that their 5G tender in search of vendors is still ongoing and “before the announcement of the results, I will not be able to provide information in any way that affects the course of the competition, either publicly or in any other way”. A Huawei representative in Hungary said that \u201ceverything is uncertain\u201d and there is no final decision yet at Telenor.<\/p>\n Meanwhile, the deadline of 30 June has passed, which was when European Union member states should have announced individually the extent to which they would or would not limit the presence of so-called high-risk vendors in 5G networks. This also affects mobile operator\u2019s vendor tenders. Although the Hungarian government has not previously raised any objections to the presence of Chinese telecommunications companies in Hungary, the parent companies of mobile operators typically decide for or against Huawei on the basis of global and regional, not just country-specific considerations. \u201cEvery country, especially the small ones, and every market player is waiting for what Germany will decide,\u201d an official from a vendor company said. \u201cMobile operators will look at what decision each member state makes, but even if they allow Huawei to be present in that country, they will also look at how much political pressure the U.S. will put on them in other countries, especially in big markets. This means that things are not looking good for Huawei,\u201d the source added. However, the German decision that everyone is waiting for has been postponed until at least September 2020<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" 5G rollout has finally started in Hungary during the pandemic. Telenor, the partly state-owned mobile operator could be the lifeline for the beleaguered Chinese company.<\/p>\n","protected":false},"author":8,"featured_media":6259,"comment_status":"open","ping_status":"closed","sticky":false,"template":"single-444.php","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[30,39,137,167,168,208,276,326,351],"ppma_author":[549],"class_list":["post-9761","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-magyar-kulpolitika","tag-5g","tag-amerikai-magyar-kapcsolatok","tag-huawei","tag-kiberbiztonsag","tag-kina","tag-magyar-telekom","tag-petr-kellner","tag-telenor","tag-vodafone","author-cap-szabolcs"],"authors":[{"term_id":549,"user_id":0,"is_guest":1,"slug":"cap-szabolcs","display_name":"Szabolcs","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","description":"","first_name":"","last_name":"","user_url":""}],"_links":{"self":[{"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/posts\/9761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/comments?post=9761"}],"version-history":[{"count":0,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/posts\/9761\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/media\/6259"}],"wp:attachment":[{"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/media?parent=9761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/categories?post=9761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/tags?post=9761"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/direkt36.exot.hu\/en\/wp-json\/wp\/v2\/ppma_author?post=9761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nBecome a supporting member now!<\/a><\/strong><\/div>\nIn half a year, everything changed for Huawei<\/strong><\/h2>\n
Orban\u2019s new Czech friend playing a key role<\/strong><\/h2>\n