Huawei and 5G Technology – Ban It and It Will Only Get Stronger

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According to Relocation Monaco, in order to get residency there you need to hold a minimum of 500,000 euros per main applicant.

If there’s two of you looking to lob into the playground of the rich and famous, that’s a cool one million euros (AU$1.62 million) you’ll need.

And you can’t put it in the bank then rip it out. It has to stay there. Which is a polite way of saying you need a minimum of AU$1.62 million you won’t use.

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Hence you can understand why so many uber-wealthy people live there.

For all its wealth, Monaco is also a forward-looking nation.

After all, you can’t have that many rich folk and have your services suck.

That’s why Monaco is the first fully connected 5G country in the world.

They have the added advantage of being one of the smallest countries in the world. That means they didn’t have to install thousands of new 5G network towers. 23, to be precise.

Still, they are first in the world. No one can take that title away from them.

You’d also think with so many rich folk there’d probably be a few secrets floating around. After all, with one police officer per 100 people, it’s a very security conscious place.

But it seems the Monegasque aren’t all that bothered about spying. Or perhaps it’s just they’re not buying into the ‘intel’ from countries like the US and Australia.

We say this because Monaco’s fully connected 5G network is built solely with Chinese owned and operated Huawei technology.

That’s right, the world’s most dominant 5G technology provider, Huawei, has their hooks in deep in Monaco. In an interview with Digital Times, the CEO of Monaco Telecom, Martin Péronnet, was asked about concerns with Huawei. HE said:

The main issue isn’t about people spying, it’s about security breaches. We’ve been working a lot with the government and Monaco’s security agency to try and define a fortress around our equipment, to monitor individually each piece. This applies not only to Huawei, but all.

Huawei is the largest network infrastructure provider in Europe

And he went on to also point out that Huawei is still the largest network infrastructure provider in Europe.

There’s no doubt that Huawei is an increasingly dominant presence in global network infrastructure. Considering the company didn’t really push into global markets until the early 2000s, it’s been quite a rise to fame…or perhaps infamy.

Infamy has really only come about in the last two years. This is off the back of escalating trade wars between the US and China. This escalated in December 2018, when the daughter of Huawei’s founder (she was also vice-chairwoman and CTO) was arrested in Canada on request from US authorities.

Since then, the US has accused Huawei of espionage and put a ban on Chinese companies like Huawei and ZTE. This was expected to do some pretty serious damage to the companies. And the flow on from the US action means that both Australia and the UK have sided with their American counterparts.

Australia has followed suit. Their ban is on Huawei networking technology for Aussie 5G networks. This is a legacy decision from the Turnbull government that will continue on through the Morrison government.

This Aussie ban was on the advice from the Australian Signals Directorate. The ‘ASD’ is also one of the ‘Five Eyes’ security organisations along with GCHQ (UK), NSA (US), Communications Security Establishment (Canada) and Government Communications Security Bureau (New Zealand). Hence, it comes as no shock that New Zealand have also banned Huawei’s 5G networks.

With this Huawei ban going on, the door for two ASX-listed 5G plays that could sweep the country has been blown wide open. These two could swoop in and take the entire Aussie 5G market along with them. These are the kinds of companies that seize on opportunity when it comes knocking.

Huawei however, will continue to face difficulty in their global 5G rollouts. But that hasn’t completely stopped the company dead in its tracks, as the US intended.

In fact, the way Huawei is operating amongst this mess is a clear sign that soon, this company is set for real global domination.

According to The Verge:

Huawei sold 118 million smartphones in the first half of the year — 59 million in each quarter — representing a 24 percent year-on-year increase. Huawei’s consumer business reached 220.8 billion yuan [AU$46.6 billion] in revenue for the same period, making up 55 percent of the company’s total sales.

That’s like selling four-and-a-half Huawei smartphones to every single human in Australia over the last year.

This info has all come via Huawei’s latest first half of 2019 reporting. The company is also acutely aware of the trouble that faces them. But like all great Chinese companies, they have nothing but their eye on the future — which is evident from the huge investment they make into R&D.

As their Chairman, Liang Hua said:

Given the foundation we laid in the first half of the year, we continue to see growth even after we were added to the entity list. That’s not to say we don’t have difficulties ahead. We do, and they may affect the pace of our growth in the short term.’

But we will stay the course. We are fully confident in what the future holds, and we will continue investing as planned — including a total of CNY120 billion in R&D this year. We’ll get through these challenges, and we’re confident that Huawei will enter a new stage of growth after the worst of this is behind us.’

That’s AU$25.35 billion this year alone on R&D. Incredible!

And it’s that next stage of growth the world should be looking out for. They might be maligned and vilified now. But wait and watch as the long game plays out and Huawei becomes, perhaps, the most important communications company in the world.


Sam Volkering

PS: US–China trade tensions have actually created some incredible opportunities for Aussie investors. Click here to discover three unique plays on the US–China trade war.  

About Sam Volkering

Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’…

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