For Huawei, A Botched Deal With Safaricom Could Be Fatal

In Africa, where Huawei Technologies has been operating for more than 2 decades, it hasn’t lost a single order. Things have not changed, but a major, rather unforeseen delay threatens the Chinese firm’s 5G ambitions in the continent.

If things worsen, a truncated deal with one of Africa’s most profitable companies could define the real beginning of Huawei’s ordeals in the continent.

Safaricom With The Reproach

When the largest telco in East Africa first publicly talked about the fifth-generation (5G) mobile internet service last year, it seemed sure that Huawei’s predicament with the United States government would in no way affect plans to partner with the telecom equipment maker.

While distancing itself from the political situation between the White House and Beijing, Safaricom declared that it would join hands with Huawei to bring 5G to Kenya. Now, however, the telecom operator has put the plan on hold for the same security concerns it previously deemed inapplicable to Africa.

Safaricom has already concluded tests and trials of the superfast service based on equipment provided by Huawei. The telco planned to switch the connection on for major Kenyan urban centers before the end of 2020. But as last year ended without the expected development, it was unclear if COVID-19 or legal drawbacks caused the delay.

Peter Ndegwa, the CEO of Safaricom, last week revealed that (as of now), there are no plans to launch the 5G network in the short term. According to him, the company’s immediate goal is to bring millions of 2G and 3G users onto the 5G wagon. The update remains in the line of the firm’s play to capitalize on burgeoning mobile internet use in Kenya.

Turning Point?

There isn’t much information to ascertain when 5G talks would resume in Kenya. But there are a few signs to read because Huawei is involved. A partnership with a telco that sits on more than 90 percent of the Kenyan telecom market could be Huawei’s biggest African deal since early 2019. It joined hands with the data-only service provider to launch South Africa’s first commercial 5G.

Since East Africa has one of the major communities in the continent, it may have been easy for other East African nations to notice and replicate Kenya’s faith in Huawei’s 5G offerings. But now, barring Uganda, which has already tied up with ZTE for East Africa’s first standalone 5G network, the delay could very well send mixed signals.

What’s more, 2020 was a relatively busy year for 5G in the continent, but Huawei was hardly in the picture for Sub-Saharan Africa. Telma Madagascar, MTN South Africa and Vodacom South Africa launched commercial 5G in conjunction with other vendors: Nokia and Ericsson.

Even Togo, a small Francophone country, launched West Africa’s first 5G network in partnership with Nokia. The same year, Ericsson scooped deals with telecom operators in Tanzania, Egypt, Bening, Congo, and Cameroon. Nevertheless, North Africa is where Huawei is making its biggest, 5G-related African strides.

Domino Effect

If influence is anything to go by, Safaricom’s reproach may not have entirely come from a single source. Bear in mind: 35 percent of the business is owned by South Africa’s largest mobile phone operator, Vodacom. Kenya’s government owns a similar stake, while British telco, Vodafone, has 5 percent of the shares.

Neither Vodacom nor Vodafone are exactly in strong ties with Huawei. In November 2019, Vodacom South Africa extended its relationship with Nokia to expand 5G to Cape Town, Johannesburg, Pretoria, and Durban. On the other hand, Vodafone, though having a history with Huawei, is collaborating with different vendors in other countries to achieve a balance.

With the ongoing clamour against Huawei in the global 5G industry, the development with Kenya’s Safaricom, if not painstakingly rectified, could herald more troubles for the firm’s African consolidation. As the drama unfolds, there’s no doubt other African countries and mobile operators are watching.

Nonetheless, when it comes to smartphones, Huawei isn’t in the rough, even in Africa. In 2019, it became the world’s second-largest smartphone seller, relegating Apple for the first time and coming behind Samsung. Per current figures from the International Data Corporation (IDC), Huawei has an 8.7 percent unit share of the African smartphone market, behind Transsion (42.2 percent) and Samsung (19.9 percent).