BCE adds Nokia as ‘first’ 5G partner, lifts dividend

Rollout to begin in ‘urban centres’ as new smartphones arrive later this year

BCE Inc. has signed an agreement to start using Nokia equipment to build out its Canadian 5G network, the telecommunications giant announced as part of its fourth-quarter earnings report.

The 5G rollout, according to Bell, will begin in “urban centres” across Canada as new smartphones equipped with 5G technology enter the market later this year. Nokia is one of the world’s leading international vendors of 5G solutions, and has 60 commercial 5G contracts with wireless carriers globally.

In a conference call with analysts, Bell’s president and CEO Mirko Bibic signalled that Nokia will not be the only provider of 5G solutions to Bell. “We are going to need to be able to work with many suppliers and that includes Huawei and Ericsson and Cisco. We are waiting on the government security review, but we will be ready to deploy 5G service to Canadians,” Bibic said.

The choice of a 5G equipment supplier has been a hot topic in the telecom world for more than a year, as network operators prepare to build their next-generation systems.

There are only a few serious suppliers of 5G network equipment, including Nokia, Ericsson and the Chinese company Huawei Technologies Co. For a variety of reasons, Huawei gear is substantially cheaper than either Nokia or Ericsson.

National security experts, especially in the U.S., have warned that using Huawei gear in Canadian networks could constitute a critical threat to key national infrastructure, because it could create a backdoor to allow the Chinese to spy on Canadian communications.

The federal government has not yet made a decision on whether to allow companies to use Huawei, but earlier this month the United Kingdom announced that telecoms in that country could use a limited amount of Huawei gear at the periphery of the network, but not in core systems.

Bibic said that he had no additional information on when the federal government’s security review on 5G would be completed. “The first build-outs will be in urban areas, but unfortunately we will have to wait to see what the decision will be before building out in rural and suburban areas. This is the consequence of regulatory overhang,” he told analysts.

BCE also announced that it would raise its dividend by approximately five per cent on the back of higher fourth-quarter profits, which grew more than 10 per cent compared to a year ago. The quarterly dividend, which was previously at 79.25 cents per share, would now be 83.25 cents per share.

Overall, the telecoms company brought it an operating revenue of $6.32 billion, approximately five per cent higher than the previous quarter, driven primarily by the company’s wireless and media divisions. Adjusted EBITDA was $2.51 billion, a three per cent decrease from the previous quarter but five per cent higher than a year ago.

BCE added 123,582 subscribers in its fourth quarter, bringing the total number of Bell Wireless subscribers to just under 10 million. The company’s wireless operating revenue grew 3.6 per cent in the four quarter to $2.5 billion, primarily due to “postpaid subscriber growth and a great sales mix of higher-value smartphones.” Financial Post