ERIC Ericsson

--Sweden's Ban on Huawei 5G Equipment Upheld

--Ban Means Ericsson Could Face Retaliation by China

--Huawei Mulling Options

By Dominic Chopping

STOCKHOLM--A Swedish court late Tuesday upheld a ban on using Huawei Technologies Co. equipment in the country's fifth-generation networks, a move that puts rival Ericsson AB at risk of facing retaliation by China.

The Swedish telecom regulator last October banned the use of Huawei and ZTE Corp. telecom equipment in critical 5G-network infrastructure due to security concerns flagged by the country's armed forces and security police.

The regulator approved four companies to participate in 5G-spectrum auctions but told them that Huawei and ZTE products couldn't be used in new installations of central functions, and any existing products from the two companies must be removed.

Huawei appealed the decision in court.

"Sweden's security is an important reason and the administrative court has taken into account that only the security police and the armed forces together have an overall picture regarding the security situation and the threat against Sweden," the court said in statement.

Huawei said the decision doesn't necessarily mean it is the end of the case and it will now mull its options.

"We respect the ruling, but are of course disappointed with the administrative court's decision which means that we continue to be excluded from the Swedish 5G market," said Kenneth Fredriksen, executive vice president for central east Europe and the Nordic region at Huawei.

"Huawei will now evaluate and analyze the ruling, its consequences for Huawei's operations in Sweden and how we can best continue to take advantage of Huawei's and our customers' rights and work for our right to continue to be part of the Swedish market," Mr. Fredriksen said.

Ericsson has previously cautioned that the decision by Sweden's telecom regulator to exclude Chinese vendors' products from the 5G auction may adversely affect the economic interests of Sweden and Swedish industry, including those of Ericsson.

The prospect of retaliation prompted Ericsson's Chief Executive Borje Ekholm to mount a lobbying campaign on Huawei's behalf. He criticized Swedish politicians and solicited lawyers to help Huawei fight the Swedish ban. He said Ericsson gets only 1% of its sales from Sweden, versus 8% from China, where the company also employs 13,000 people and runs a factory.

Before Tuesday's decision, Chinese Communist Party publication The Global Times had said that Ericsson's participation in the next round of China's massive 5G build-out is linked to whether Stockholm changes its stance on Huawei.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

June 23, 2021 05:04 ET (09:04 GMT)

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