Canadian Telcos Spent $700M on Huawei Gear Amid Ban Uncertainty, Now Want Compensation: Report

According to Global News, Canadian telecom companies are seeking “compensation” from the federal government for over $700 million in network equipment that was purchased from Chinese tech giant Huawei, while the Liberal government teeter-tottered on banning the company from participating in Canada’s 5G wireless networks on national security grounds.

Huawei has long been one of the most prominent vendors of radio access network equipment — the tools telcos use to connect mobile phones and computers and other communications devices to networks, in Canada.

However, that is expected to change soon as a decision to ban the Chinese company from Canada’s next-generation wireless networks is expected to come down in a matter of weeks.

The Liberal government put Huawei’s potential participation in 5G networks under review back in 2018, due in part to immense pressure from close security allies like the U.S., U.K, and Canada, but has delayed a final decision on the matter for over two years.

The U.K. government took a similar step last year, banning Huawei 5G equipment starting in September 2021. Canada’s decision has taken three long years and continues to be undecided.

While the Liberal government delayed a decision on banning Huawei from Canada’s 5G networks, telecoms had already purchased over $700 million in network equipment from the company.

According to Huawei, the company’s network equipment sales in Canada broke down to $300 million in 2018 and “slightly more” than $300 million in 2019, and Canadian telecommunications companies bought an additional $100 million worth of gear in 2020 — all while the Liberal government suggested banning Huawei from the country’s under-development 5G networks.

“Although Canadian operators have announced different 5G partners for their future network buildout, the reality right now is that Huawei equipment remains in current networks in most major Canadian cities, and many remote regions of Canada,” said Alykhan Velshi, Huawei Canada’s vice president of corporate affairs.

“Our focus will remain on serving our customers who have our gear in their current network.”

Banning Huawei equipment would likely result in telecoms having to replace all of the Huawei gear they’ve bought for their 5G networks, resulting in significant costs for companies like Bell, Telus, and SaskTel, which are all widely believed to employ a significant amount of the Chinese corporation’s tech.

Last year, Reuters reported that Canadian telecoms may end up approaching the federal government for up to $1 billion in compensation should the Liberals decide to ban Huawei.

A government source told Global News on Wednesday that multiple telecommunications companies have already approached the government to discuss “compensation” in the event that Huawei’s 5G equipment is banned from Canadian networks.

“We’re working with the various telcos to ensure there’s a competitive environment, but the safety and protection of Canadians is always there (in the discussion),” said Prime Minister Justin Trudeau said Wednesday to reporters, adding the Liberal government was continuing “to follow the advice of our experts, our intelligence and security analysts.”

The source said Ottawa has told those companies the conversation is premature. The government hasn’t come to a decision on Canada’s 5G future yet, despite more than three years of studying and evaluating the issue.

Last week, the National Post first reported both Bell and Telus apparently have asked the federal government for compensation, if they need to remove Huawei gear.