Vodafone suspends use of Huawei equipment in its core networks

Hong Kong(CNN Business) Vodafone is putting Huawei on hold.

The world's second largest mobile operator said Friday that it is pausing the installation of Huawei equipment in its core networks in Europe, given the political uncertainty surrounding the Chinese telecoms firm.

It is just the latest blow for Huawei, which is facing heightened scrutiny as a growing number of governments express concern that its technology could be used by Chinese spies.

The United States, Australia and New Zealand have restricted the use of the company's products in their 5G networks, citing national security risks. Germany and Canada are considering similar measures.

Huawei maintains that its products do not pose a security risk, and that it has no ties to the Chinese government.

Vodafone (VOD) CEO Nick Read said on Friday that the company decided to "pause" the deployment of Huawei equipment in its core networks in Europe while it speaks with regulators, governments, security agencies and the Chinese company itself. It will continue to use Huawei's radio equipment.

He noted that Huawei is a key company in the telecoms equipment market, and said that the debate about the Chinese firm was taking place at a "simplistic level."

The telecoms equipment market is dominated by three companies — Huawei, Finland's Nokia (NOK) and Sweden's Ericsson (ERIC). Huawei is the world's largest supplier, and its market share in Europe is estimated at between 35% and 40%.

Vodafone's Read warned that if there were a "complete ban" on all Huawei network equipment, "it would be a huge issue for us and the whole European telecommunications sector" and significantly delay the rollout of 5G networks.

A Huawei spokesman said in a statement Friday that the company "is focused on supporting Vodafone's 5G network rollouts, of which the core is a small proportion."

"We are grateful to Vodafone for its support of Huawei," he added.