Exclusive: TIM excludes Huawei from 5G core equipment tender

MILAN (Reuters) - Telecom Italia (TIM) TLIT.MI excluded China's Huawei Technologies from a tender it launched this month for 5G equipment for the core network it is preparing to build in Italy and Brazil, two sources familiar with the matter said.

FILE PHOTO: Huawei's new flagship store is seen ahead of tomorrow's official opening in Shanghai, following the coronavirus disease (COVID-19) outbreak, China June 23, 2020. REUTERS/Aly Song/File Photo

The list of invited suppliers comprises Cisco CSCO.O, Ericsson ERICb.ST, Nokia NOKIA.HE, Mavenir and Affirmed Networks, a company recently acquired by Microsoft MSFT.O, one of the two sources said.

A Telecom Italia source described the omission of Huawei from the current tender as “part of our suppliers’ diversification policy”.

Representatives for Huawei in Italy and Brazil declined to comment.

The decision to prevent Huawei from bidding for the Italian network gives the Chinese company no recourse. But Huawei or other suppliers could be invited to rejoin the process in Brazil at a later date, a source at the company’s Brazilian unit said.

In response to the Reuters report, TIM Participacoes TIMP3.SA, the Italian company's Brazilian unit, said it had not yet taken any decision over its 5G equipment suppliers.

“The company will go through its purchasing process, guided as always by criteria of quality and competitive pricing, applying the rules defined by Brazil’s institutions,” it said in a statement.

The source with knowledge of TIM Participacoes’ plans said depending on market conditions a second tender for purchasing 5G gear could be held in Brazil once new frequencies are auctioned by the government, which is expected to happen next year.

TIM Participacoes is listed on the stock exchange in Brazil and has minority investors who might favour an inclusive process.

Huawei has played no part in the building of TIM’s existing core network in Italy, but the exclusion could mark a change of course for TIM in Brazil, where Huawei has supplied 4G equipment for the core network of its local unit.

So-called core networks are where sensitive data is processed.

The U.S. government has urged its allies to exclude the Chinese telecoms giant from the West’s next-generation communications.

Italian newspaper La Repubblica reported on Wednesday that Italy is considering whether to exclude Huawei from building its 5G network over concerns it could open the way for China to spy on key Western telecoms infrastructure.

Huawei on Thursday defended its record as a private sector infrastructure group and said “the security and development of digital Italy should be based on an approach grounded in facts and not baseless allegations.”

Huawei has successfully conducted 5G tests with all of Brazil’s major carriers including TIM Brasil and is helping them modernize their infrastructure ahead of a 5G spectrum auction.

Brazilian leader Jair Bolsonaro, a former army captain and close ally of U.S. President Donald Trump, said last month that 5G deployment would have to meet national sovereignty, information and data security requirements.

A Huawei executive this week warned that Brazil could suffer years of delay in deploying 5G network and higher costs if it succumbed to U.S. pressure to snub the Chinese supplier.

Reporting by Elvira Pollina, additional reporting by Gabriela Mello in Sao Paulo, writing by Valentina Za, editing by Keith Weir and Jon Boyle