VOD Vodafone Group Plc

By Adria Calatayud

U.K. telecommunication operators are engaged with the British government as they seek to recover part of the extra costs resulting from the government's ban on 5G equipment made by China's Huawei Technologies Co., Vodafone Group PLC's Chief Executive Nick Read said Friday.

There are a number of mechanisms that the government could use to support operators such as relief on charges during a transition period, Mr. Read said in a call with reporters. Another option could be to abandon an upcoming auction of 5G spectrum and allocate spectrum to operators at a price set by the administration, he said.

The British government said earlier this month that it would bar U.K. telecom companies from purchasing new equipment made by Huawei for their 5G networks from the end of this year and give carriers until the end of 2027 to strip out existing Huawei gear.

Vodafone's CEO said he was disappointed by the decision, but appreciated that the government had acknowledged the complexity of the issue and tried to minimize the disruption to customers.

"It does cost the industry and the industry has a very low return on capital," Mr. Read said, adding that the ban comes at a time when consumers and businesses rely more than ever on telecom networks due to the coronavirus pandemic.

Mr. Read said Vodafone is still working through the impact of the new regulation, but that there is nothing to disclose at the moment.

Andrea Dona, head of networks at Vodafone U.K., told British lawmakers earlier this month that a full removal of Huawei equipment would imply additional costs of low single-digit billions of pounds.

Rival operator BT Group PLC in January warned that it would take a 500-million-pound ($637.1 million) hit over five years due to previous U.K. restrictions on Huawei equipment for 5G networks.

Mr. Read said this was a U.K. decision due to the country's geopolitical position that won't necessarily be followed by the European Union, which has outlined its own policy recommendations.

"I would not automatically extrapolate this to Europe," Mr. Read said.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

July 24, 2020 05:15 ET (09:15 GMT)

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