BT warned on Monday that it would be "impossible" to remove all the equipment made by Huawei in its telecoms networks in less than a decade, as the industry cautioned the UK government against taking drastic action against the Chinese company.
With Boris Johnson set to on Tuesday ban the use of new Huawei kit in Britain's 5G mobile phone networks, BT chief executive Philip Jansen flagged the risk of service blackouts if further draconian measures are taken against the Chinese telecoms equipment maker.
An executive at another UK telecoms company said a British prohibition on all Huawei equipment could backfire if Beijing retaliated and placed an export ban on kit made in Chinese factories by Ericsson and Nokia, the two main alternative suppliers that have their headquarters in Europe.
The prime minister's National Security Council meets on Tuesday to consider an official UK report about the risks of using Huawei kit in British telecoms infrastructure following new Washington sanctions that aim to deny the Chinese company access to semiconductors made with US equipment.
Johnson is set to abandon his stance of January, when he said Huawei could have a limited role as a supplier of 5G kit for UK networks, with the company capped at a market share of 35 per cent.
The prime minister is expected to propose a ban on the use of new 5G kit from Huawei that would take effect within months, but UK telecoms companies fear the announcement could be accompanied by a move to force them to rapidly rip out existing equipment made by the Chinese company and installed in older infrastructure, including 4G and 3G mobile networks and fixed-line broadband.
Jansen told the BBC that removing existing Huawei equipment was not feasible in the short term.
"It is all about timing and balance," he said. "So if you want to have no Huawei in the whole of the telecoms infrastructure across the whole of the UK — that's impossible to do in under 10 years."
Jansen said telecoms companies would "probably" be able to remove Huawei equipment from 5G networks within five years.
Johnson is struggling to balance the needs of the UK telecoms industry, which is investing in 5G and full-fibre broadband to deliver on his election pledge to improve infrastructure, against pressure from rebel Conservative MPs and the Trump administration to ban Huawei.
Senior Tories and the US government claim Huawei could be used by Beijing to spy on western countries.
The Trump administration lobbied Downing Street to ban Huawei outright ahead of Johnson's announcement in January, and has repeatedly urged ministers to rethink.
Ryan McCarthy, US secretary of the army, said Washington was watching the latest UK deliberations "very closely".
He told the Royal United Services Institute, a London-based think-tank, on Monday: "It's important for [the UK] as they approach this to appreciate that you need to have reliable [telecoms companies] in play, and ones that cannot be easily manipulated or create disruption or the potential for espionage . . . It's truly something that could be a tremendous threat to national security."
Johnson has been urged by UK telecoms companies to delay the introduction of the ban on the use of new 5G kit made by Huawei until the end of 2020, in the hope that Washington sanctions against the Chinese company could be eased around the time of US presidential elections in November.
Some in the industry cling to the idea that Donald Trump could strike a trade deal with China before the election or that Joe Biden, the Democratic presidential candidate, might take a softer line with Beijing if he won.
But the Trump administration has taken an increasingly hard stance on Huawei this year and there is no expectation that it will ease up before the election. Biden has also adopted a tough approach towards China.
BT and Vodafone have the most Huawei equipment in their UK networks, but most British telecoms businesses have some kit made by the Chinese company.
BT said in January that the cost of complying with the 35 per cent cap on Huawei's market share would be about £500 million ($961m). Industry executives estimate that the cost to the sector of removing all Huawei kit in the UK could run into billions of pounds.
Huawei has called on the British government not to rush its decision about the company as it has large stockpiles of equipment that it can supply to UK telecoms companies without breaching the new US sanctions.
The company has repeatedly said it is a private business, and not an arm of the Chinese state.
Victor Zhang, vice-president of Huawei, told MPs last week: "We definitely have the capacity to support the UK market."
- Additional reporting by Demetri Sevastopulo.
Written by: Nic Fildes, George Parker and Helen Warrell
© Financial Times