05 July 2018
| Alan Burkitt-Gray
Ericsson is the first telecoms vendor to benefit from rival company ZTE’s dispute with the US by capturing a €600 million contract.
At the same time ZTE has appointed a new CEO, CFO and CTO
and other senior executives, conforming with a deal with the US
to replace existing management.
The new CEO, said Hong Kong newspaper South China Morning
Post (SCMP) this morning, is Xu Ziyang,
previously president of ZTE’s telecom cloud and
core network product line. Xu is a previous CEO of
ZTE’s operation in Germany, where E-Plus
– then owned by KPN – was a customer.
The CFO is Li Ying, currently a vice-president in the finance
department, says the SCMP. Wang Xiyu is the CTO. ZTE
has not yet made any announcement about these or other changes
of senior management.
A complete change in management was part of the agreement
between ZTE and the US Department of Commerce (DoC), which
found that the company had not stuck to a previous agreement
after the US uncovered evidence that it smuggled US hardware
and software to Iran and North Korea.
The US threatened to ban all use by ZTE of US-licensed
technology, but ZTE agreed to a $2.3 billion fine as well
as the management changes.
A last-minute attempt by the US Congress to stop the settlement
fizzled out after politicians agreed simply to ban US
government agencies from buying Huawei and ZTE phones and
equipment – something that was never likely.
But outside the US the effects of the ban and the uncertainty
about ZTE’s security have begun. Italian mobile
operator Wind Tre is understood to have switched an order from
the Chinese vendor to the Swedish company – though
neither Ericsson nor Wind Tre are commenting.
The news emerged as Hong Kong-based CK Hutchison, which owns
the worldwide Three mobile brand, agreed to buy out Veon’s 50% stake in Wind Tre for
ZTE won the Wind Tre deal in December 2016
in what was seen at the time as a significant blow to Ericsson,
which had also been competing for the order – as had
Huawei and Nokia. ZTE said at the time that the order would
help to make it the company’s European hub.
Ericsson’s loss came at a particularly bad time
for the Swedish company, which had just fired CEO Hans Vestberg
because of falling performance and replaced him with Börje
Ekholm. If Ericsson has regained the Wind Tre business, it will
be a significant win for Ekholm. He will be giving
Ericsson’s second quarter report on 18 July
– so may be able to comment on it by then.
However, other deals may be under consideration as operators
ponder the long-term stability of ZTE after two brushes with
the DoC in two years – the second of which nearly
closed down the company.
Department of Commerce,