The covid-19 outbreak has put the brakes on investing in new 5G mobile telecommunications networks, and operators are trying to get more out of their existing networks.
That's provided a small boon to telecommunications equipment maker Huawei Technologies New Zealand, which is out of favour with the nation's intelligence agencies, having been blocked so far from helping build Spark New Zealand's 5G mobile network.
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Huawei NZ deputy chief executive Andrew Bowater said the global uncertainty caused by the pandemic had prompted operators to rethink major capital projects, and his company's partners are trying to make the most of upgrading existing networks instead.
"We're doing a lot of work with our partners expanding the 4G space - there's a lot of capacity in that space," Bowater told BusinessDesk. "That's our big focus at the moment."
That's also a potential avenue for the government's plans to revive the economy with major infrastructure investment, although Finance Minister Grant Robertson has said water and waste management are at the front of the queue.
Bowater said the expanded rural broadband initiative – where the government uses a levy on operators to fund investment in uneconomic areas – could go even further, which he said would be a worthwhile investment.
Spark, Vodafone New Zealand and Two Degrees Mobile set up a joint venture – the Rural Connectivity Group – to work with Crown Infrastructure Partners to improve rural broadband and mobile services. CIP chair Mark Binns heads a government group tasked with identifying infrastructure projects that the state might get involved in.
Huawei remains hopeful about winning over the government on 5G, despite reports that the UK is now shying away from allowing the Chinese telco to participate in the build.
Still, Bowater said the company isn't pushing hard, and the covid-19 pandemic has put a lot of development on hold anyway.
"I don't think anybody is going to rush to do any capital investment right now."
The government's planned auction for temporary spectrum to help operators get 5G up and running was sidelined for several months as the pandemic hit and disrupted the economy. The government ended up allocating short-term spectrum instead.
Removing Huawei from the mix is likely to push up the cost of building those networks, and the nation's closed borders will mean some new entrants, such as Samsung, will struggle to have the expertise on the ground to support that work.
Bowater said the New Zealand arm of Huawei is in a stable position, although it will come under pressure if new projects don't start to come back on stream later this year.
Huawei's local accounts, filed with the Companies Office last month, show revenue rose to $198.8 million in calendar 2019 from $188.6 million a year earlier. Profit dipped to $4.9 million from $5 million.