Removing Huawei equipment could cost Canadian telecoms $1 billion

Removing Huawei equipment from next-generation 5G networks could cost Canadian telecom giants an estimated $1 billion.

According to a Globe and Mail report, executives at both Telus and BCE compiled the financial costs of a prohibition on the Chinese telecom’s technology.

One executive suggested banning Huawei would cost $500 million to $1 billion for Telus alone. Another industry source told the Globe it would cost BCE hundreds of millions of dollars. Finally, a third insider said the total estimated cost for both BCE and Telus would exceed $1 billion. The Globe gave the sources anonymity as they weren’t authorized to discuss sensitive company business.

These costs would come from having to rip out and replace tens of thousands of antennas as the companies remove Huawei equipment.

BCE and Telus use Huawei equipment in their cellular networks. However, Rogers, which has some Huawei equipment, has mainly partnered with Swedish telecom Ericsson, which is Huawei’s main competitor in 5G.

Should a Huawei ban come to pass, BCE and Telus would likely have to switch to Ericsson as well.

Further, Telus devotes roughly $1 billion to capital expenditures a year. The majority of that goes towards network infrastructure. Bell invested a little over $730 million in each of the last two years to capital expenditures in the wireless business. The company also spent approximately $3 billion a year on communications systems using cable and wire.

Veritas Investment Research telecommunications sector analyst Desmond Lau told the Globe that ripping out and replacing this infrastructure would be quite expensive.

For both BCE and Telus, he said: “It would not be unreasonable to think a full rip-and-replace would cost in the range of $1 billion.” However, Lau noted this figure was a “guesstimate” not based on information disclosed by the companies.

Lau also noted it was too soon to say whether a rip-out will, won’t or might happen.

Currently, the federal government is conducting a national security review to determine if Canada should follow fellow Five Eyes intelligence-sharing alliance members in banning Huawei products from 5G cellular networks. So far, the U.S., Australia and New Zealand have all banned Huawei.

While some federal MPs say Canada should exercise caution on the issue, others worry the U.S. is influencing Canadian foreign policy regarding Huawei and China.

Source: Globe and Mail