Telecom Italia is looking to cancel to contract with Huawei for supplying equipment to build part of the telecom firm’s 5G network in the country, reports Reuters citing sources aware of the development.

If the company goes ahead with the plan, then it will be a major blow to the Chinese telecom giant as Telecom Italia is one of Huawei’s biggest clients in Europe. The company has already lost some business to its rivals Nokia and Ericsson.

The development comes as the United States has been pressuring its allies to ban Huawei equipment from their 5G infrastructure, citing a national security risk. However, in the European region, only Britain and Sweden have banned Huawei for 5G.

Now, this new report, citing a source aware of the development, claims that Telecom Italia has sent a letter to Huawei informing its intention to call off the contract. The development was first reported by the newspaper Il Sole 24 Ore.

Earlier, the plan of the Italian company was to give the contract to Huawei and Ericsson but later the company split in among three companies by bringing Nokia to the mix. But now it seems that the contract will be split between Nokia and Ericsson.

Huawei was already excluded from the core of the 5G network which is used for processing sensitive data. The new development related to the Chinese giant comes after a review of supply policy, including a cost and benefit analysis, says the report.

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Italian mobile network provider Telecom Italia has decided to continue to retain Nokia as its major supplier in its planned purchase of equipment for building a 5G network, thus significantly scaling down its reliance on Huawei, sources say. This move may not be unrelated to pressure to exclude the company completely on security concerns.

The United States has lobbied Italy and other European allies to avoid using Huawei’s equipment alleging it could pose a security risk – a charge Huawei has continued to debunk. Italy has so far declined to slam an outright ban on Huawei for now.

At the start of the year 2020, Italy’s defunct national telecoms provider, Telecom Italia (TIM) had considered the possibility of splitting the supply contract for the radio access network (RAN) part of its 5G architecture between Huawei and Sweden’s Ericsson, sources had said.

The RAN architecture consists of the base stations and antennas that serve as an interface between a user’s smartphone and the mobile network. It accounts for the bulk of the cost of a new network.

The helsinki-based company, Nokia which has previously been among TIM’s mobile RAN equipment suppliers, was earlier projected to likely miss out on the 5G RAN order. However, the agreement has since been reviewed and has captured supplies from the Finnish giant.

Ericsson is expected to provide the bulk of the 5G equipment supplies to TIM, while Huawei and Nokia will get up to 25% each of the supplies, according to a reliable source earlier on Wednesday.

At this time, a definitive statement is still being expected from the companies, as neither of them was willing to either confirm or deny the claims. There is however no public evidence of the initial agreement which would have seen Nokia dropped.

As a direct consequence of the US clamp-down on Huawei, telecom operators in Europe have become more circumspect in continuing their previous supply contracts and other operations with the Chinese company. Several sources who are conversant with the matter said it is obvious that Rome has aligned itself with US concerns and adopted a more reserved approach in consummating 5G deals by encouraging operators to diversify their 5G suppliers – a way of reducing the influence of Huawei.

This present move follows the action of Telecom Italia earlier this year, who did not consider extending an invitation to Huawei to tender for a 5G equipment supply contract for its core network operations.

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