ZTE says Italy's new powers to intervene in 5G will delay deployment

People walk past a ZTE logo outside its booth at the Mobile World Congress in Barcelona, Spain, February 25, 2019. REUTERS/Sergio Perez

MILAN (Reuters) - Chinese telecom equipment firm ZTE Corp warned on Wednesday that the Italian government’s newly strengthened power to intervene in the development of fifth-generation telecoms networks may further delay 5G mobile services in the country.

Under its beefed-up “golden power”, Rome decreed that it could block 5G deals involving non-European firms on national interest grounds. It acted out of concerns over the potential involvement of ZTE and another Chinese equipment maker, Huawei Technologies, a government source has said.

The United States has lobbied Italy and other European allies to avoid Huawei equipment and to also pay close scrutiny to ZTE, alleging the vendors could pose a security risk. Both companies have strongly denied any such risk.

“The recent decree of golden power creates more and bigger uncertainty for the industry players,” ZTE Italy Chief Executive Hu Kun told Reuters in an e-mailed response to questions.

“Uncertainty is not good for investment business, and definitely further delay the 5G deployment in the country.”

Under the decree, a deal involving non-European companies could take up to 165 days to receive government approval.

Hu Kun also said the powers should be applied to the whole industry, echoing comments made this week by Huawei which called for them to be applied to all vendors, including European firms.

“(It’s) crucial to solve the issue and create a fair, competitive environment,” Hu Kun said.

The decree must be approved by parliament in the next 60 days or it will expire.

Editing by Mark Bendeich