VANCOUVER – Telus clearly doesn’t want to give up on Huawei, one of its primary technology suppliers.
While the Chinese manufacturer’s gear is effectively banned from the United States, Australia and other countries due to security worries, and is limited in its deployment in others, Telus has long been a loyal Huawei customer and wants to continue.
The Canadian government is undertaking a national security review of potential partners in Canada’s 5G network, primarily targeting Huawei since the United States, Australia and New Zealand have banned Huawei from their 5G networks, while the United Kingdom has imposed strict security requirements on the Chinese telco’s equipment and software.
The U.S. Justice Department’s recent announcement that 23 criminal charges have been laid against Huawei Technologies, its affiliates and its chief financial officer, Meng Wanzhou – who is currently facing extradition from Canada to the U.S. – certainly hurts China’s telecommunications titan’s chances to play a significant role in developing Canada’s 5G wireless networks.
Telus, which has been testing Huawei 5G technology and has been deploying 3G and 4G Huawei gear for some time, addressed the issue in its fourth quarter report to shareholders and during its conference call with financial analysts Thursday.
“Over the last decade, our partnership with Huawei has allowed us to utilize the most advanced technology in a cost-effective manner in our… 3G and 4G networks without any security incidents,” reads the Telus Management Discussion and Analysis. “In building our 3G and 4G national networks, we have collaborated closely with the Government of Canada for many years to ensure robust protections across all equipment used.
“This has included complying with a series of security protocols that effectively ban Chinese equipment from our core networks and limit such equipment to the less sensitive radio and antenna portions. We are continuing to work with the government as it conducts this cybersecurity review and we have yet to select a vendor for our 5G network,” continues the MD&A.
“A decision prohibiting the deployment of Huawei technology without compensation or other accommodations being made by the Government of Canada could have a material, non-recurring, incremental increase in the cost of Telus’ 5G network deployment.” – Telus
“A decision prohibiting the deployment of Huawei technology without compensation or other accommodations being made by the Government of Canada could have a material, non-recurring, incremental increase in the cost of Telus’ 5G network deployment and, potentially, the timing of such deployment. In the case of a ban, there is a risk that the Canadian telecom market would undergo a structural change, as a reduction to an only two global supplier environment could permanently affect the cost structure of 5G equipment for all operators.”
Essentially, if a company as large, advanced and prolific as Huawei is disqualified, the number of vendors to choose from gets smaller, more expensive and will potentially slow 5G deployment.
During the call with Bay Street’s analysts, Entwistle re-iterated that no Huawei gear can currently be found in Telus’ “core network” noting the UK and European telecom companies which announced limitations on Huawei, the ban is only from core networks.
“So they're now moving to follow the network architecture model similar to that used by Telus over the past decade,” he added. “In addition, the Italian and German governments had confirmed that they will not ban Huawei from their networks… Germany stated any ban would not apply to Huawei or China alone but security standards would apply universally to all potential service providers.
“Our partnership with Huawei over the past decade has been fruitful for Canada and fruitful for Canadians… Canada's wireless networks are consistently the most capable in the world. Our Huawei partnership has allowed it to be exceptionally innovative with our network deployment.”
Should the federal government ban Huawei technology, Telus will act on that, but will be able to manage the financial hit, added Entwistle.
