Odds of Huawei ban have increased in recent months: analyst

The likelihood Canada will ban Huawei Technologies Co. Ltd. equipment from the country’s 5G networks has gone up in recent months, and if that happens, the deployment of those networks will be delayed, National Bank analyst Adam Shine said in a research note. “Plans have been made, some capex spending has been brought forward in preparation of 5G deployments where in some cases (would be so with Huawei) existing 4G equipment can be software upgraded to 5G, and multi-year forecasts have been established and fine-tuned,” he said in Monday’s note. Echoing comments previously made by Desjardins analyst Maher Yaghi, Shine said estimates that BCE Inc. or Telus Corp. would face a billion-dollar financial hit as a result of the ban are unrealistic. Those two companies use Huawei equipment extensively, he noted, while Rogers Communications Inc. and Shaw Communications Inc. have swapped out Huawei gear they previously had in their networks for equipment from the companies they’re partnering with for 5G -- Ericsson AB and Nokia Corp, respectively. Looking at what other countries have done, “nobody expects Huawei equipment to be banned from existing networks in Canada,” and the 5G networks haven’t been deployed yet, Shine said. But if Huawei equipment is banned from those future 5G networks, “then some delays can be expected as strategic course corrections take place and new procurement plans are established” with alternate suppliers. The exact cost of that is “hard to quantify,” he said. Shine added that “some recent spending efforts would have to be replaced and one must acknowledge that Huawei has tended to be the low-cost supplier with a relative premium attached to future purchases.” Public Safety Minister Ralph Goodale was asked by reporters Tuesday after a cabinet meeting about analyst predictions a 5G ban is overwhelmingly likely, but declined to weigh-in. “I don't speculate about internal processes within the Government of Canada,” he responded. Goodale, who said last week the security review into Huawei will take much longer than a matter of weeks, also wouldn’t specify Tuesday whether that decision would come before or after the federal election in October. The government is under pressure from the U.S. to implement a ban, while a majority of Canadians said in a recent poll by the Angus Reid Institute that Canada should ban Chinese investment in “sensitive industries” like telecommunications.

Odds of Huawei ban have increased in recent months: analyst

Brief | February 5, 2019

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Odds of Huawei ban have increased in recent months: analyst

Brief | February 5, 2019

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