Canada is Less Likely to Entertain Huawei’s 5G Compensation

In an exclusive report by Reuters, the Canadian government is less likely to pay compensation worth C$1 billion ($758 million) in a case if the federal government officially bans the leading Chinese telecom company, Huawei Technologies Co Ltd. (Huawei) from 5G networks bid in the country. Over the recent months, Canada has been under the pressure from the United States (US) government to remove the Chinese company for the next-generation 5G platform regarding issues related to national security and violation of the privacy rights of the users.

Ottawa has been putting the telecom equipment provider under tight scrutiny and examining whether to allow Huawei into 5G networks with no sign of a decision coming any time soon. Despite Canadian providers took matters into their own hands, they had to deal with various matters with Huawei as they have been relying on the Chinese company for their 4G networks over several years.

No Compensation for Huawei

Sources close to the matter told Reuters that companies associated with Huawei would file a compensation claim for removing their existing Huawei gear and equipment installation if Ottawa put a ban on the Chinese company. However, the Canadian government seemed less convinced and has already made up a view that it would not consider the matter since the proposed compensation bill was excessively high.

A government official said, “I’m not sure there is a solid legal case that we would have to compensate for making a proper national security decision.” The official further added the federal politicians were worried about “the public perception of handing over a billion dollars or more to very large companies,” considering the prevailing economic situation, impacted by the COVID-19 pandemic.

Given the highly sensitive economic situation of the country, a government source reported, “We obviously want to spend money on things we feel are going to grow the economy rather than on something like that (compensation).”

Alternative 5G Providers

Canadian local telecom providers including Bell Canada (Bell) and Telus Corp. (Telus) and their collaboration with other major providers such as Ericsson and Nokia Oyj could be the alternative for the 5G platform in the country without Huawei. The local companies earlier said that they would partner with Ericsson and Nokia Oyj, even though they use Huawei in their 4G networks.

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Experts explained Bell and Telus had to remove their support of Huawei’s 4G equipment at the end since the mixing the different service providers by combining 4G and 5G gears would be more complicated. However, experts explained that these local companies have time until June 2021 to carry out their re-arrangements.

In a February 2019 filing, Telus said a ban without compensation could increase the cost of its 5G network deployment and make services more expensive for consumers. Scotiabank analysts said on June 2 it would cost Bell a total of between C$300 million and $350 million over three to five years to strip out Huawei gear. At the same time, BMO estimated Telus had roughly double the exposure than that of Bell.