Suspicion of spying prompts Poland to consider banning Huawei from developing 5G network

Banning Huawei from developing 5G networks in Poland would result in higher prices for consumers and delays in implementing the new technology, the chief executive of Poland's biggest mobile operator Play said.

Warsaw is considering excluding Huawei equipment from its next-generation network over concerns first raised in the United States that the Chinese firm's technology could be equipped with back doors to allow access by the Chinese government. Huawei, whose equipment forms the backbone for most of the Play's telecommunications network, denies allegations that its technology could be used for spying.

"We haven't been provided with any evidence of security problems with Huawei equipment so far. Of course, we will support the government, if there are any questions, surveys whatsoever, but we haven't received or recorded any signals of security problems yet...," Jean-Marc Harion told Reuters. "The main message I would like to reinforce is that a ban of Huawei would impact negatively the Polish consumer in terms of prices and time-to-market," the CEO said following the release of Play's 2018 results on Monday.

Play said its net profit rose last year to 745 million zlotys ($196 million) from 387 million a year earlier on higher sales and falling costs. Analysts had expected Play's net profit at 725 million zlotys in 2018. It expects its adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation) to grow to 2.2-2.3 billion zlotys this year from 2.16 billion in 2018, whereas FCFE (free cash flow to equity) is expected to fall to 670-750 million zlotys from 816 million reported in 2018.

"The market of smartphones is slowing down in Poland and that's why we are quite careful in our guidance of the sale of goods in 2019. Nevertheless, we see the trend from 2018 to continue in our service sales, so we expect service revenue to grow in 2019," Harion said. He added that the company wants to pay 45 per cent of FCFE in dividends for 2018 and confirmed its policy of paying 40-50 per cent of FCFE as dividends. ($1 = 3.7946 zlotys) (Editing by Alexander Smith)

(With inputs from agencies.)