Telus to launch 5G network with Huawei by the end of 2020

Originally Published by Financial Post
Author: James McLeod

Telus Corp. will launch a 5G network in Canada later this year using Huawei Technologies Co gear, Telus’ CFO said Thursday.

“We’re going to launch 5G with Huawei out of the gate,” Doug French said in an interview with the Financial Post, after the Canadian telecom reported fourth-quarter earnings.

“We will continue to work with the government to make sure we meet all their standards, but we don’t see anything slowing us down at the moment.”

The next-generation wireless technology is set to become a major narrative for telecom companies in Canada, as all three network operators plan to launch some sort of 5G service this year.

Rogers Communications Inc. has already announced that they have turned on their preliminary 5G network in four Canadian cities, though that’s something of a theoretical milestone, since no customers can actually connect yet.

The upgrade to 5G has been inexorably tied to Chinese equipment manufacturer Huawei, because it is one of only a handful of companies in the world that makes leading-edge wireless equipment. Huawei is also widely recognized as cheaper than competitors Nokia and Ericsson. But national security experts have raised concerns that its equipment may allow the Chinese to compromise Canadian communication systems.

The federal government has yet to make a decision on whether to allow Canadian telecom companies to use Huawei for 5G, as several allies have banned the equipment on national security grounds.

French said Telus will follow whatever course Ottawa sets, but he said the company isn’t slowing down in the meantime.

“We’ll continue to assess, and we will look at opportunities if that arises, but at the moment we’re going to continue to build our networks as we lead in the world on our 4G network,” French said.

“We’re going to continue to comply with whatever government rule comes out in the timeframe, but at this stage, we think our 4G and LTEa networks will be faster.”

French said that the plan right now is to use Huawei gear in the radio access network (RAN) — basically, the antennas that send wireless signals to the phones — but it will not be the backbone of the Telus 5G network for now.

“In the RAN network, we will be launching a 5G network with Huawei,” French said.

French downplayed the significance of 5G this year, because the federal government hasn’t auctioned off key 3.5 GHz wireless spectrum. Nor have the rules of that auction been set.

French said the Telus 4G LTE-Advanced network is solid, until the new spectrum allows for additional benefits.

“Any launch that goes in 2020 is not going to have 3.5 spectrum, and those auction rules are going to be announced shortly and we don’t expect to have the actual spectrum until at least Q4 — i.e. a full rollout in 2021 for 3.5,” French said.

“5G networks being rolled out early are fast — don’t get me wrong — but our LTE-A network and the current spectrum that we have, we believe, will be as fast or faster than any preliminary 5G launches until 3.5 is awarded.”

Thursday, Telus reported fourth-quarter revenue of $3.9 billion, up 2.5 per cent year over year, and net income of $379 million, up 3 per cent.

In the fourth quarter, the company added 176,000 net new customers, including 130,000 new wireless customers.

For 2020, Telus is forecasting revenue growth of between six and eight per cent, and adjusted EBITDA growth of between five and seven per cent.

The company is signalling that capital expenditure will fall slightly in 2020, from $2.9 billion in 2019 to $2.75 billion.

French said the slowdown in capex is driven by the fact that Telus has already built a lot of fibre optic cable in its network — a key component of both high-speed internet service, and 5G cell service.

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