European telecom operators could face costs of up to €40 billion to remove Chinese-made equipment from their networks, according to a new industry report. The study also warns that two Nordic companies would end up controlling nearly the entire market, driving up prices across multiple equipment categories.

The estimates, released Wednesday, are more than three times the €10 billion to €13 billion total previously projected by Brussels. The report was commissioned by seven major European operator groups, including Deutsche Telekom, Vodafone, and Orange, and prepared by GSMA Intelligence, the research arm of the global telecoms industry body GSMA.

The findings follow the European Commission's move to amend its Cybersecurity Act. The proposed changes would legally require member states to strip all equipment from countries deemed high risk, with China's Huawei and ZTE as the primary targets. The shift would escalate Europe's approach from guidance to binding obligation: the EU's 2020 5G cybersecurity toolbox encouraged member states to assess high-risk suppliers but did not mandate removal, leaving individual countries to set their own rules. Several member states, including Sweden and Romania, have already restricted or excluded Huawei at the national level, while others have taken a more limited case-by-case approach.

The United States, which prohibited new purchases of Huawei and ZTE telecom equipment in 2022 under a Federal Communications Commission ban, has long urged European allies to follow its lead. Washington has also offered a subsidized "rip and replace" program for its own carriers, though at a far smaller scale than what European operators now face.

The study describes the removal cost as "one of the most significant structural interventions in the European telecoms sector in decades."

Cost Breakdown Exceeds Commission Projections

The total expense breaks down across three categories. New mobile base stations and related hardware would cost between €16 billion and €22 billion. Transport network equipment, which moves data between sites, would add another €9 billion to €12 billion. Fixed broadband gear, including fiber access equipment, accounts for a further €5 billion.

The European Commission had previously looked only at mobile networks. The GSMA study, by contrast, also covered fixed broadband and transport networks, drawing on internal cost data from operators serving close to half of all mobile subscribers in the EU.

The report highlighted that pushing out Chinese suppliers would sharply shrink competition, with no new players expected to fill the gap. Mobile equipment prices would rise by 24 percent, fixed broadband gear by 19 percent, and transport network equipment by 10 percent. If most of Huawei and ZTE's business goes to the single biggest remaining supplier, mobile equipment costs could jump by as much as 43 percent.

Those price increases would add approximately €8.5 billion to operator investment plans between 2027 and 2030, and roughly €24 billion more by 2035. The timing intersects with the EU's 2030 "Digital Decade" connectivity targets, which call for gigabit coverage for all households and 5G on all major transport paths across the bloc.

Market Concentration Among Nordic Vendors

Huawei currently holds around a quarter of the EU's mobile equipment market, a share that climbs to about a third when ZTE is included. In fixed networks, the two Chinese companies together account for close to 40 percent.

Removing them would leave Sweden's Ericsson and Finland's Nokia as the only serious players. Ericsson's mobile market share would rise to nearly 60 percent, with the two firms together holding around 96 percent. Nokia's share of fixed broadband would climb from 30 percent to close to 50 percent.

Higher costs, the report said, would push operators to slow or cancel network upgrades, deepening Europe's existing €205 billion digital infrastructure shortfall.

A separate study published in May by the China Chamber of Commerce to the EU and consulting firm KPMG estimated the broader economic damage from the proposed rules at €367.8 billion over five years, including €57.4 billion for the telecoms sector.

Growing Resistance Within the Bloc

Germany and Spain are leading pushback from member states, with officials from both countries arguing that a Brussels-level ban risks triggering retaliation from Beijing and driving up the cost of building AI infrastructure across Europe.

China's Foreign Ministry has made that threat explicit. "If Chinese companies are subjected to discriminatory treatment as a result, China will take resolute measures in accordance with relevant regulations to safeguard the legitimate rights and interests of Chinese companies," a ministry statement said.

German Economy Minister Katherina Reiche, speaking to reporters in Beijing on Wednesday, summarized the dilemma. "We need to counter unfair competition, for example, in steel and ferroalloys, with appropriate measures, while at the same time ensuring that our companies can continue to export," she said.