Ericsson and Nokia discontinue business in Russia. Is Huawei next?

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London
CNN business

Nokia has announced its withdrawal from Russia, while rival Ericsson is indefinitely on hold there, threatening the country’s ability to build super-fast 5G networks.

The Finnish telecommunications company said on Tuesday that staying in Russia was “not possible” amid President Vladimir Putin’s ongoing attacks on Ukraine.

“In recent weeks we have suspended deliveries, halted new business and shifted our limited R&D activities out of Russia,” Nokia said in a statement. “We can now announce that we will leave the Russian market.”

This leaves China’s Huawei as the only top 3 5G network provider in the world still active in the country.

Western governments have imposed several rounds of punitive sanctions on Russia since the invasion, including restrictions on importing advanced technology into the country.

However, they have stressed the need to maintain functioning telecommunications networks on humanitarian grounds to allow Russians to access information from abroad.

Nokia (NOK) said it would “seek to provide the necessary support to keep the networks up and running” and is applying for licenses to ensure sanctions compliance.

Ericsson (ERIC), meanwhile, said on Monday it would indefinitely suspend its operations in the country and put its workers on paid furlough. It had already stopped all deliveries to customers in Russia at the end of February.

Western companies have gone out of business with Russia in droves since the invasion began in late February. Russia now faces the arduous task of building domestic alternatives to Western products and services, possibly with the help of Chinese suppliers.

This task could extend to the next-generation Internet. Nokia and Ericsson are two of the world’s largest providers of 5G mobile networks – the ultra-fast internet that will underpin a number of future technologies.

In the last four years, the companies have launched the most commercial and trial 5G networks worldwide — Ericsson has launched 216 and Nokia 200, according to Kagan, a data provider from S&P Global Market Intelligence. China’s Huawei ranked third with 75 launches.

All three providers are important for Russia: Huawei and another Chinese company, ZTE (ZTCOF), supply between 40% and 60% of Russia’s wireless network equipment, while Nokia and Ericsson supply the rest, according to telecoms research firm Dell’Oro Group.

In November, Nokia announced it was forming a joint venture with Yadro, a Russian data storage developer, to build 4G and 5G telecom base stations in Russia. That project has now been shelved, a Nokia spokesman confirmed to CNN Business.

Recent reports point to Huawei deploying 5G networks to Russia’s largest mobile operator MTS – could follow its European competitors in halting new business.

Forbes reported Tuesday that Huawei forced some of its office workers in Russia to take a month’s furlough after suspending new orders, citing three sources close to the matter. The company fears it will run afoul of western sanctions if it does business in the country, a source told the publication.

But Huawei, which continues to fight for survival after US sanctions severely restricted its access to key technologies, has so far remained silent except to call for peace in Ukraine.

Asked about sanctions against Russia at an outcomes conference in March, Guo Ping, Huawei’s rotating chairman, said, “Like each of you, we hope for a ceasefire and an early end to the war. And we believe that wise leadership will soon end this crisis and restore normal life.”

CNN’s Sharon Browne-Peter, Chris Liakos and Michelle Toh contributed coverage.

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