Feb 18, 2020

Tech: EU's top competition chief leaves door open for US stake in Nokia, Ericsson

Arjun Kharpal

The European Union’s competition chief left the door open to the possibility of the U.S. government taking a stake in two of the continent’s top 5G players — Nokia and Ericsson — as long as there is no risk to security.
U.S. Attorney General William Barr said earlier this month that the government should consider taking a controlling stake in Nokia, Ericsson or both in order to “blunt” Chinese firm Huawei’s “drive to domination” in next-generation mobile networks known as 5G.
Nokia and Ericsson are two of the biggest networking equipment makers and direct competitors to Huawei.
Margrethe Vestager, the EU’s competition commissioner, told CNBC Tuesday that it’s up to the “businesses to answer if they are for sale or not” but it’s up to European lawmakers “to make sure that every risk is assessed.”
“Here in Europe we are neutral on ownership, you can be state owned or privately owned, what is important for us is that you act as a market operator that you have a real business case for what you do,” Vestager told CNBC’s Silvia Amaro.
“So, you know, I have no specific point if the U.S. state would want to buy a stake, and I don’t know if there is a stake in Nokia, Ericsson that is for sale,” she added, essentially leaving the door open to a move.
EU Commissioner for Competition Margrethe Vestager.
Emmanuel Dunand | AFP | Getty Images
Washington maintains that Huawei is a national security risk, claiming its equipment could be used by the Chinese government to spy on citizens or shut down networks. Huawei has denied that this could happen.
President Donald Trump’s administration has been pressuring countries around the world, particularly in Europe, to ban Huawei from their 5G networks. The U.K. defied Washington’s calls and made a decision to partially allow Huawei to participate in the country’s 5G rollout. Germany is the next European nation set to make a decision on it.
The U.S. does not have its own competitor to Huawei and has been trying to figure out how it might compete. Controlling stakes in Nokia and Ericsson is one suggestion.
Members of Trump’s administration don’t appear to agree with Barr’s suggestion however. Vice President Mike Pence told CNBC earlier this month that he does not endorse Barr’s plan and instead backs the Federal Communication Commission Chairman Ajit Pai and his drive to free up more spectrum for 5G. Spectrum are radio frequencies requires for mobile networks to run.
Ericsson declined to comment when contacted by CNBC. Nokia has yet to respond to a request for comment.
At the time of Barr’s comments, Ericsson declined to comment while Nokia said “we always welcome investor interest” in the company.
Ericsson’s biggest shareholder Cevian Capital said U.S. interest in the technology firm is “clearly positive” for the company, Sweden and shareholders.
Christer Gardell, a managing partner at Cevian Capital, appeared to back an American deal.
“It is clearly better for Sweden, the company, the employees and the shareholders that an American deal is done with Ericsson and not with Nokia. The board and management need to drive and handle this question with the highest priority,” he told CNBC by email.

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