Expert Speak Digital Frontiers
Published on Oct 21, 2020
Czech Republic’s CETIN does what the government couldn’t: reject Huawei

When governments are unwilling or unable to take hard calls, private companies dial the no-Huawei numbers. After Australia, the US, and the UK, but one day before Sweden, a small firm from the landlocked Czech Republic has rejected Chinese firms in its 5G rollout. In a 19 October 2020 statement, the country’s largest network operator CETIN said it will use the Swedish firm Ericsson to build next-generation 5G networks. In other words, this is not a State-led ban as in the case of Australia, the US, the UK or Sweden. This is a decision taken in the CETIN boardroom — and one that several other global boards will be negotiating — nudged partly by the changing tech-politics of communications technologies and partly by a potential but inevitable backlash against Chinese firms due to a rapidly-changing, US-led geopolitics to which the EU will sooner rather than later succumb. CETIN’s network extends to 99.6% of the country’s population. This immediately makes it a politically-sensitive company, whose every move, every act and every tender will be scrutinised by democratic processes. Given the growing mistrust with China and its private arm Huawei, this could be a potential disaster for CETIN. Further, CETIN is part of the PPF group that has assets of $56 billion and operates across 24 countries in telecom, biotechnology, and real estate, and hence vulnerable in businesses beyond telecom and geographies outside Czech Republic.

Given the growing mistrust with China and its private arm Huawei, this could be a potential disaster for CETIN. Further, CETIN is part of the PPF group that has assets of $56 billion and operates across 24 countries in telecom, biotechnology, and real estate, and hence vulnerable in businesses beyond telecom and geographies outside Czech Republic.

Unlike G2G engagements, where Prague would need to evaluate the sensitivities of Beijing against Washington’s and view them across a larger geopolitical swathe, a private firm is a free to appoint its vendors. Here, the new risk for all major companies is China. At what point will Xi Jinping and his Chinese Communist Party use any one of the weapons it has against the country in which companies are working has now become a game of Chinese Roulette — from military and trade to investments and technology, the Chairman of Everything has weaponised every term of engagement. All of these sit atop China’s 2017 National Intelligence Law, four articles of which (Articles 7, 9, 12 and 13) turn every institution, company and citizen into a spy (read detailed paper here). Finally, the risk is not on CETIN alone; the other businesses of its principal, the PPF group, will be at risk in other countries as well. It is keeping this risk-mitigation in mind that CETIN has eschewed Huawei and embraced Ericsson. Broadly, CETIN is doing what every other company will do: take hard decisions in favour of the business, the shareholders, and the customers — decisions that governments sometimes can’t take.

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Author

Gautam Chikermane

Gautam Chikermane

Gautam Chikermane is a Vice President at ORF. His areas of research are economics, politics and foreign policy. A Jefferson Fellow (Fall 2001) at the East-West ...

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