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Is China Rigging a 5G Test Against Ericsson and Nokia?

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Experts checking for security weakness in 5G equipment

British newspaper the Sunday Telegraph reported recently that China was performing ongoing tests of 5G equipment with a view of promoting Huawei at the expense of its Western rivals Ericsson (ERIC) and Nokia (NOK).

A team of computer security experts is conducting a security test of 5G equipment to check for vulnerabilities. According to the report, China is secretly briefing the experts on security vulnerabilities in Ericsson and Nokia equipment discovered by its state-sponsored hackers. The goal is to portray Ericsson’s and Nokia’s equipment as less secure than Huawei’s equipment.

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Huawei struggling to win 5G contracts

Huawei competes with Ericsson and Nokia in the market for telecommunications equipment, and currently, the companies are pursuing contracts for 5G equipment. Last year, Ericsson and Nokia picked up 5G contracts worth $3.5 billion each from US operator T-Mobile (TMUS), which is in the process of merging with its rival Sprint (S) in a $26 billion deal.

Ericsson and Nokia have continued to clinch 5G deals, with Canada’s top operator, Rogers Communications (RCI), selecting Ericsson as its 5G supplier. Last month, Nokia also secured a 5G contract from Japanese operator SoftBank (SFTBF). However, Huawei is having a difficult time in the race for 5G contracts, as the US has labeled it as a national security risk and is now campaigning to persuade its allies to lock Huawei out of their 5G markets.

Ericsson’s network revenue jumped 10%

Ericsson derives most of its revenue from network equipment sales. The company’s revenue from its networks business rose 10% year-over-year to $3.6 billion in the first quarter.

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