A ban on Huawei Technologies Co., Ltd.’s equipment in Canada’s 5G network makes for bad business, according to Telus Corporation (TSX: T).
In a February 14 filing the Vancouver-based telecom giant cautioned investors over the potential financial fallout from Ottawa nixing Huawei’s 5G technology.
“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,” the company stated.
“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.”
The Chinese technology giant has fallen under intense global scrutiny recently over concerns its 5G equipment could facilitate spying for Beijing.
Canadian intelligence allies such as Australia, New Zealand and the U.S. have already banned Huawei’s 5G equipment over espionage concerns.
The U.K., meanwhile, is in the midst of a security review of risks posed by Huawei.
Bell Canada and Telus have been partnering with Huawei to develop the future 5G network while Ottawa conducts its own security review.
“Over the last decade, our partnership with Huawei has allowed us to utilize the most advanced technology in a cost-effective manner in our advanced 3G and 4G networks without any security incidents,” the Telus filing stated.
“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.”
Tensions between Canada and China have been frosty since the December 2018 arrest of Huawei CFO Meng Wanzhou at Vancouver International Airport following an extradition order from the U.S.
Chinese authorities has subsequently arrested a number of Canadians, including diplomat Michael Kovrig and businessman and Michael Spavor, and sentenced Canadian Robert Lloyd Schellenberg to death for drug smuggling following a sudden retrial.
