Huawei ban could hurt company, Telus says

Telecom believes Chinese firm isn’t a security threat

Telus Corp. acknowledged Thursday that the deployment of its fifth-generation wireless network could be delayed and be more expensive than anticipated if Ottawa chooses to ban equipment from Huawei Technologies Inc. The Vancouver-based company — which has used Huawei radio equipment in non-core portions of its 3G and 4G wireless networks — said it continues to believe the China-based company doesn’t pose a big risk to national security.

However, Telus said in its discussion of fourth-quarter and year-end financial results, that it can’t predict the outcome of a review of 5G cybersecurity being conducted by the federal government.

A ban on Huawei equipment “could have a material, nonrecurring, incremental increase in the cost of Telus’ 5G network deployment and, potentially, the timing of such deployment,” the company said.

Telus said it seeks to reduce the potential risk of a Huawei ban, through its dealings with the government and federal telecom regulator, but has yet to select its suppliers for 5G equipment.

Last week, George Cope, chief executive of BCE Inc., told analysts that a

government ban on Huawei equipment wouldn’t delay plans for rolling out fifth-generation wireless services but provided few details. Cope, who is CEO of both BCE and Bell Canada, told financial analysts that the company is “quite comfortable” that it can manage all the potential developments.

Although Bell and Telus have a network-sharing agreement in terms of cellular towers used by their wireless networks, they each independently select equipment installed at the towers.

Despite the uncertainty over Huawei, which Canada already bars from supplying core network equipment like switches and servers, Telus said its outlook for 2019 assumes “no material adverse regulatory rulings or government actions.”

Telus issued guidance Thursday that estimates 2019 revenue will grow by up to 5 per cent and earnings before taxes and other expenses will rise by up to 6 per cent over last year’s level.

For 2018, Telus reported overall revenue of $14.37 billion — up 7.2 per cent from 2017 — and $5.1 billion of EBITDA, up 3.9 per cent from 2017.

For the fourth quarter of 2018 ended Dec. 31, Telus said its net profit edged higher and operating revenue grew by 6.3 per cent over the comparable period in 2017, slightly above analyst estimates.

Profit attributable to shareholders amounted to $357 million or 60 cents per share for the quarter ended Dec. 31.

That was up from $353 million or 59 cents per share in the fourth quarter of 2017. Adjusted net income was $409 million or 69 cents per share, up from $396 million or 66 cents per share a year earlier.

Telus says its revenue was $3.76 billion, up from $3.54 billion in the fourth quarter of 2017. Analysts on average had expected 69 cents per share of adjusted earnings and $3.69 billion in revenue, according to Thomson Reuters Eikon.