Vodafone Hutchison Australia has finally reached a deal with equipment vendor Nokia to build Australia’s third 5G network, months after competitors Telstra and Optus went live with their own fifth generation networks.

Vodafone said the rollout of the network would begin in the first half of 2020.

The announcement comes weeks before the Federal Court is due to hand down its decision on whether Vodafone should be allowed to merge with TPG Telecom. The $15 billion merger was blocked by the Australian Competition and Consumer Commission in May on the grounds it would lessen competition in the mobile market.

TPG had been in the process of building a mobile network, but abandoned construction in January.

Optus and Telstra, the only other mobile network operators, both switched on their 5G networks in the first half of 2019, meaning Vodafone is at least a year behind its competitors.

Along with the ACCC’s unexpected decision to block the merger with TPG, Vodafone was delayed by the federal government’s decision to ban telecoms companies from using the equipment of Chinese vendor Huawei in 5G networks.

Vodafone was a heavy user of Huawei equipment, which industry sources say is as much as 30 per cent cheaper than the other vendors. With Huawei out of the mix, Vodafone was limited to a choice between Finnish vendor Nokia and Swedish vendor Ericsson.

It was the Huawei ban that prompted TPG to abort construction of its unfinished 4G network, on the grounds that there was no way of upgrading to 5G without replacing all the Huawei equipment at great expense. Vodafone has had the same problem, meaning in areas where it is upgrading to 5G, it will have to replace all Huawei equipment with new Nokia equipment, rather than simply upgrade it.

Vodafone Australia chief executive Inaki Berroeta said the deal marked “an exciting milestone in Vodafone’s 5G network rollout”.

“We have worked with Nokia for several years across different elements of our network. They presented a compelling roadmap that aligned with our 5G objectives and will help us to continue improving our 4G network for our customers,” he said.

“Their knowledge of our network is extensive, and they are in the best position to ensure a seamless transition and that we reach our 5G goals as soon as possible while maintaining the best experience for our 4G customers.”

The deal with Nokia lasts five years, and gives Vodafone flexibility to scale up or down the pace of its 5G rollout according to requirements. That means if the merger does go ahead, the merged company will be able to ramp up the rollout.

But despite agreeing to merge, the companies have only exchanged a limited amount of confidential information, meaning Vodafone made the deal with Nokia without knowing the exact specifications and reach of TPG’s abandoned 4G network.

Vodafone said Nokia’s 5G equipment would work on all the spectrum bands currently in use for 4G. It would include new generation 5G “Massive MIMO antennas”, which Vodafone said would “substantially increased gains in capacity and performance”.

In October, Justice John Middleton indicated he would hand down his ruling on the merger in February 2020.

This story originally appeared in the Australian Financial Review. Read the original story here.

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