Another reason why the swap can't wait

Research evidence excerpt

Another reason why the swap can't wait

Equity Research - 15 May 2026 08:49 CEST

Telecom Equipment

• DT-Rheinmentall "Drone Defence Shield' highlights risk of Huawei in RAN

• DT has ~60% Huawei

• EU Huawei-swap to add ~15% p.a. to adj. EBITA to ERIC and NOK

'Drone Defence Shield' exposes Huawei ties in Germany

This week, Deutsche Telekom (DT) and Rheinmetall announced the launch of the 'Drone Defence Shield' initiative (link), which

aims to protect Germany against drone-based and hybrid threats. Under the agreement, Rheinmetall will provide the kinetic

firepower, while DT will supply the detection capabilities, computing power, and connectivity - most critically, utilising the mobile

network as a wide-area radar. However, given that Huawei accounts for ~60% of DT's mobile networks, this raises security

concerns, as the main drone detection system would be Chinese-manufactured radio infrastructure.

~15% adj. EBITA uplift for ERIC and NOK - if the swap proceeds

The raises security concerns strengthens the case we have been making for the past 24 months: defence imperatives are the

single most important catalyst for accelerating the replacement of Huawei in Europe's networks. Regarding the latter, Chinese

vendors currently account for ~30% of the EU's RAN - a figure that has remained largely unchanged since 2022. We calculate

that the opportunity could add ~15% to the annual earnings of each of the Nordic suppliers, assuming they share this evenly

(link).

News flow remain supportive

Despite uncertainties around who will pay the bill for the swap (see our comment here), news flow continues to support a shift

toward using NATO-soveign RAN suppliers. This includes European Commission's proposed revision of the Cybersecurity Act,

which was announced earlier this year (Jan'26).