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If Canada bans Huawei, wireless companies could seek $ 1 billion in compensation: Report

According to a new report from ReutersCanada’s wireless companies affected by a potential 5G ban on Huawei will try to seek $ 1 billion in compensation for the government’s decision.

The story from Reuters cites a named government source close to the situation and others as well.

If Ottawa announced a ban on Huawei 5G, “affected companies have made it clear that they want compensation for tearing out their existing Huawei equipment,”

; said two unnamed sources close to the situation.

Bell Canada and Telus Corp are currently using Huawei 4G network equipment. A ban on Huawei will mean that existing 4G equipment is not compatible with new 5G equipment from Ericsson and Nokia respectively. The end result will mean that existing Huawei 4G equipment must be removed.

An anonymous government source said Reuters, “I’m not sure it’s a solid trial that we have to compensate for in making a proper national security decision.”

MPs will also have to face “the public notion of handing over a billion dollars or more to very large companies,” the unnamed government source added.

“We obviously want to spend money on things we feel will boost the economy instead of on something like that (compensation),” the government source said.

According to Scotiabank analysts in June, Bell would face a $ 300-350 million CAD hit in five years to remove Huawei 4G equipment. For Telus, BMO estimated the exposure to nearly double that of Bell, at a total cost of nearly $ 1 billion or so for both companies to remove Huawei equipment.

Another unnamed source said the Canadian government could follow a similar approach as the UK, which provided wireless companies until 2027 to remove existing Huawei equipment, a longer time frame that would result in old equipment requiring replacement anyway.

Back in December 2018, unnamed executives told Telecom The Globe and Mail The estimated cost of removing Huawei equipment for Telus and Bell will be around $ 1 billion. Reuters says

In February 2019, Telus said that a Huawei ban could possibly increase the cost of the company’s 5G rollout.

In June this year, Telus chose Ericsson and Nokia to expand its 5G network, while Bell chose Nokia as its first 5G partner.

The federal government has not announced whether it will ban Huawei 5G or not, a decision that is approaching two years and most likely is related to the fate of Huawei’s CFO who is currently fighting against the US extradition in Vancouver.

Canada’s 5G wireless spectrum auction is not set to take place until 2021.

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