Nokia will become bt's largest supplier after the finnish group won an expanded deal to replace huawei as a key supplier of 5g equipment to the uk company.

The uk government said in the summer that britains mobile phone operators would not be able to buy new huawei equipment for 5g networks from next year and would need to replace all the kit from the chinese group that has already been installed by 2027, due to national security concerns. the move represented a volte face from an earlier decision that huawei equipment could be used for 5g networks but would be capped at 35 per cent.

Nokia has become a beneficiary of that decision after bt, the biggest user of huawei equipment in british telecoms, said on tuesday it would expand the use of nokia radio equipment to more towns and cities across the country.

The espoo-headquartered group already provides kit to more than a quarter of the sites of bts ee network for 4g and is also a critical supplier to openreach, bt's fixed line networking division, which is upgrading its copper based network to full fibre cables.

Philip jansen, chief executive of bt, said: in a fast-moving and competitive market, its critical we make the right technology choices. with this next stage of our successful relationship with nokia we will continue to lead the rollout of fixed and mobile networks to deliver standout experiences for customers.

The uk governments policy toward huawei has delayed the widespread rollout of 5g networks and increased costs for the industry. bt has estimated that it will cost it 500m to comply with the governments rules.

The deal is a win for nokia which has struggled to keep up with huawei and swedish rival ericsson in the initial phase of 5g.

John delaney, an analyst with idc, said: its an important one for nokia. this bt win will be seen as a vote of confidence, because bt has been trialling nokias 5g kit for about a year, and its unlikely that it would commit to nokia for the majority of its sites if it hadnt been satisfied with the kits performance.

Pekka lundmark, who took over as chief executive of nokia in august, said: our two companies have collaborated for over a quarter of a century in order to deliver best-in-class connectivity to people across the united kingdom.

It is unlikely, however, that bt will rely solely on nokia for new 5g radio equipment for long as the government has also stressed the need to diversify the supply chain in telecoms. nokia said it will work with bt on open ran trials part of a broader industry push to use smaller, innovative companies which seeks to break the stranglehold of the big suppliers.

Ericsson, which won a contract to supply software for bts 5g core network this year, is likely to win work from the uk group according to analysts. mr delaney said that a supplier like samsung was not really an option as its equipment did not support 2g or 3g but that it could be a contender alongside nec and fujitsu in the future as part of bts longer term overhaul of huawei equipment.

Nokia shares edged 0.5 per cent higher in early trading.