By Paul Allen in strategic leverage — 11 Nov 2025

EU Moves to Mandate Phase-Out of Huawei and ZTE Gear, Resetting Telecom Network Security Constraints

On November 2025, the European Commission (EC) took a decisive step by advancing plans to transform its 2020 recommendation into binding regulation to phase out telecom equipment from Huawei and ZTE across the European Union’s telecommunications networks. The move formalizes a shift against these Chinese vendors labeled 'high-risk' due to security concerns, targeting core infrastructure such as 5G base stations and network routers. While the EC has not disclosed a specific enforcement timeline or financial implications, this regulatory push compels member states to systematically eliminate Huawei and ZTE hardware, which currently constitutes a substantial portion—estimated at 30-40% in some markets—of European telecom infrastructure.

The Actual Constraint: From Cost and Access to Security and Sovereignty

The leverage mechanism reshaping the EU’s telecom strategy pivots on shifting the fundamental operational constraint from price and supplier availability to national security and data sovereignty. Previously, many operators tolerated Huawei and ZTE’s lower-cost equipment and rapid deployment capabilities, accepting vendor lock-in as a trade-off for competitive 5G rollouts. The EC’s 2020 recommendation already pressured operators to diversify, but converting that into a regulation removes ambiguity and enforces compliance, fundamentally altering supplier selection constraints.

This constraint shift ripples down the supply chain: European telecom operators must now source from vetted, less cost-competitive vendors who comply with stricter cybersecurity standards, raising immediate procurement costs and deployment complexity. For example, until now, Huawei’s competitive pricing allowed operators to acquire 5G base stations at roughly 20-30% lower unit costs compared to alternatives like Ericsson or Nokia. Removing Huawei and ZTE not only increases upfront capex but also raises operational costs due to ecosystem fragmentation and integration challenges.

This Regulatory Lever Disrupts Vendor Ecosystem Lock-In

EU’s move leverages regulatory power to dismantle the entrenched ecosystem lock-in that Huawei and ZTE created over a decade. Telecom networks are complex systems where hardware, software, and maintenance contracts intertwine. Operators face high switching costs because replacing equipment requires extensive network redesign, retraining, and newly forming supply chain relationships.

By mandating phase-out, the EC is effectively resetting this lock-in. Operators will need to either build multi-vendor networks or move toward European-based suppliers with stronger sovereign control, which introduces new system design constraints. For instance, adopting multi-vendor architectures introduces interoperability complexity, but it disaggregates dependency on any single supplier and reduces geopolitical risk exposure.

This is a clear repositioning move: rather than competing vendors on feature innovation or cost, the EU is substituting the vendor trustworthiness constraint for competitive bidding. This recalibration creates a long-term strategic advantage for European suppliers and any third-party companies investing in secure network components tailored to this new regulatory environment.

Impact on Telecom Operators and Cost Structures

This transition imposes immediate operational constraints on telecom operators. Removing Huawei and ZTE equipment by regulatory mandate means accelerated capital expenditure on replacement hardware and increased operational expenditures linked to supply chain management and training.

To illustrate, Deutsche Telekom had approximately 40% of its 5G equipment from Huawei as of 2024. Replacing this infrastructure requires full hardware swap-outs with alternatives like Ericsson or Nokia, whose prices run $300-$500 more per base station on average. At thousands of stations, this translates into hundreds of millions in unexpected capital costs. Additionally, European operators must factor in longer deployment timelines and integration of new network management systems—each introducing complexity that does not scale linearly.

Operators previously optimized deployment speed and cost, but now must optimize for compliance and security, revealing an underlying trade-off that restructures operational priorities and supplier relationships.

Why the EU Did Not Choose a Gradual 'Risk Mitigation' Over Phase-Out

Instead of mandating a phase-out, the EU’s 2020 recommendation allowed member states to adopt a risk mitigation approach, which included increased inspections, redundant security layers, and partial use restrictions. Moving to a full phase-out regulation disrupts this incremental constraint and signals that risk mitigation is insufficient for systemic security concerns.

This regulatory upgrade addresses a systemic structural weakness: risk mitigation requires constant human intervention and costly audits, inherently fragile in scale. By contrast, compulsory removal of high-risk equipment embeds security resilience directly in the network infrastructure, a mechanism that runs without continuous oversight. This moves security enforcement from a maintenance problem to a built-in network property.

The alternative—retaining Huawei and ZTE equipment with mitigation—kept the constraint on operator’s internal risk management capabilities, allowing vendors to indirectly shape compliance budgets and priorities. The legal prohibition divorces that constraint, reallocating leverage back to governments and trusted European suppliers.

Broader Geopolitical and Supply Chain Implications

The decision also intersects with global supply chain dynamics and geopolitics. By excluding Huawei and ZTE, the EU shifts its telecom supply dependency away from Chinese vendors towards suppliers that often rely on semiconductor and hardware components from the US, South Korea, and Europe.

This realignment is a leverage play akin to what China’s rollback on rare earth export limits did to global supply chains in tech and manufacturing (related analysis). The EU’s move can accelerate supplier consolidation around trusted vendors, increasing their market share and ability to innovate within a defined security framework. However, it also exposes telecom infrastructure to new concentration risks centered on fewer suppliers, reinforcing the importance of multi-vendor strategy developments.

What This Means for Telecom Network Design and Automation

The forced vendor transition will accelerate adoption of more modular, software-defined network architectures that reduce hardware dependency on specific vendors. Operators must automate integration, monitoring, and network orchestration across heterogeneous equipment sets.

This point echoes themes from our coverage on telecom leverage and automation systems (telecom leverage systems), where automation decouples network complexity from manual intervention. Organizations investing early in such automation will convert the compliance-driven vendor phase-out constraint into an operational advantage, cutting costs and risk otherwise imposed by manual, slow network management processes.

Adoption of open radio access networks (Open RAN) and similar frameworks is a direct systemic response to this regulatory environment, offering flexible vendor substitution without full hardware replacement—precisely the kind of mechanism that turns regulatory constraint into leverage.

Why European Telecom Operators Must Rethink Vendor Relationships as a Leverage Move

Operators traditionally negotiated vendor contracts emphasizing volume discounts and integrated services. The enforced phase-out breaks long-term vendor lock-ins, forcing operators to reconstruct these relationships with a focus on flexibility, security certifications, and regulatory compliance.

This is a repositioning of negotiation constraint: from price and integrated maintenance to regulatory risk management capability. Operators able to rapidly certify and integrate alternative vendors gain leverage by shortening compliance cycles and reducing downtime, ultimately lowering the total cost of ownership in a constrained regulatory environment.

This affects procurement teams, vendor certification processes, and network engineering groups, shifting leverage towards internal cross-functional collaboration to meet tightened external constraints—a dynamic outlined in our article on cross-functional collaboration for business leverage.

Navigating the complex transition away from high-risk telecom vendors requires precise intelligence and strategic outreach. For telecom operators and suppliers aiming to rebuild vendor relationships and accelerate compliance efforts, platforms like Apollo provide invaluable B2B contact data and sales intelligence to streamline prospecting and partnership development. This is exactly why tools such as Apollo have become essential for teams managing vendor diversification and regulatory-driven market shifts. Learn more about Apollo →

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Frequently Asked Questions

Why is the EU mandating a phase-out of Huawei and ZTE telecom equipment?

The EU is mandating this phase-out due to security concerns about Huawei and ZTE, which are labeled 'high-risk' vendors. The regulation aims to embed security resilience directly into telecom infrastructure, moving from risk mitigation toward a full ban.

What percentage of European telecom infrastructure currently uses Huawei and ZTE equipment?

Huawei and ZTE equipment constitute an estimated 30-40% of telecom infrastructure in some European markets, including approximately 40% of Deutsche Telekom's 5G equipment as of 2024.

How much more expensive is replacing Huawei and ZTE equipment with alternatives like Ericsson or Nokia?

Replacing Huawei and ZTE hardware with alternatives like Ericsson or Nokia can cost $300-$500 more per 5G base station. With thousands of stations, this adds up to hundreds of millions in unexpected capital expenditure.

What operational challenges do telecom operators face due to the EU phase-out regulation?

Operators face increased procurement costs, longer deployment timelines, ecosystem fragmentation, and integration complexity due to dismantling vendor lock-in and switching equipment providers.

How does this EU regulation affect the vendor ecosystem and telecom network design?

The regulation disrupts established vendor lock-in, pushing operators to build multi-vendor networks or favor European suppliers. It also accelerates adoption of modular, software-defined, and automated network architectures to manage heterogeneous equipment.

Why did the EU choose a full phase-out instead of a risk mitigation approach?

Risk mitigation proved fragile and costly, requiring constant audits and human intervention. A full phase-out embeds security directly into the infrastructure, making enforcement automatic and reducing reliance on operator risk management.

What are the broader geopolitical implications of removing Huawei and ZTE from EU networks?

The EU shifts dependency away from Chinese vendors to suppliers relying on US, South Korean, and European components, accelerating supplier consolidation but creating new concentration risks.

How should European telecom operators rethink vendor relationships under this new regulatory regime?

Operators must prioritize flexibility, security certifications, and regulatory compliance over traditional price and service integration, fostering cross-functional collaboration to shorten compliance cycles and reduce downtime.