Huawei ban wouldn’t delay BCE’s 5G rollout: Cope

The head of BCE Inc. says he doesn’t expect that a ban on Huawei Technologies Co. Ltd.’s equipment from Canada’s 5G networks would hamper or delay Bell’s 5G rollout. President and CEO George Cope moved to reassure investors and analysts on a Thursday earnings call that the company could manage that situation with relative ease. “We’ve made no selection yet of our 5G vendor,” Cope said. “And if there was a ban, or if we chose a different supplier than Huawei for 5G, we’re quite comfortable all those developments would be addressed within our traditional capital intensity envelope and, therefore, no impact from a capital expenditure program outlook.” “Nor do we think whatever the outcome is would it in any way impact our timing in the market for 5G,” he added. The comments come amid swirling media speculation about whether the federal government’s cyber security review will result in barring Huawei from Canada’s 5G networks and how such a move would hit companies — in particular, Bell and Telus Corp., which have been working with Huawei on 5G. Huawei has been a supplier Bell’s radio access layer for 3G and 4G mobile networks for a number of years, Cope noted. Canada’s telecom companies and top brass have largely avoided addressing the prospect of such a ban publicly until now. Analysts have suggested that media headlines saying a ban would leave a billion-dollar mark on the industry are unlikely, although the chances of a ban have increased and would likely cause some delays. The Liberal government, feeling intense pressure on both sides from the U.S. and China, has said it is not yet close to reaching a decision. Bell meanwhile ended its fourth quarter with results largely in line with what analysts expected. Operating revenues were up three per cent to $6.22 billion from last year’s fourth quarter. Net earnings dropped eight per cent to $642 million and statutory earnings per share also dropped. Those were pushed downward by a $190 million non-cash media asset impairment charge, related mainly to its French-language specialty channels experiencing drops in subscribers, according to Bell’s CFO Glen LeBlanc. Canaccord Genuity Corp. analyst Aravinda Galappatthige characterized the quarter in a note as “in-line financially,” with subscriber loading “somewhat below expectations” — although the subscriber gains look positive compared year-over-year. “We believe that BCE is trading at a compelling valuation,” said Desjardins analyst Maher Yaghi in a note. “However, the entire industry is continuing to see deterioration in wireless growth, muting overall growth.” He said wireless subscribers slightly missed expectations while wireline subscribers were in line. The company added 143,114 new wireless subscribers — of which 121,780 were postpaid and 21,334 prepaid for its Lucky Mobile flanker brand, launched in 2017. Yaghi noted the prepaid gains were notably below projections of 33,500, but the miss is “much softer” than what rival Rogers Communications Inc. reported. That company added 112,000 postpaid in its fourth quarter but posted a loss of 139,000 prepaid. Telus reports its fourth quarter earnings next week. Bell posted gains of 29,627 internet subscribers and 36,473 IPTV customers Thursday, while it lost 27,220 satellite TV subscribers. Bell ended the quarter with a total of 9.61 million total wireless subscribers and 3.93 million internet customers. Wireless revenues were up 4.6 per cent to $2.3 billion, driven by growth and a higher proportion of postpaid customers choosing plans with larger data allotments and more expensive smartphone sales, LeBlanc said. Wireline grew 2.4 per cent to $3.3 billion, while Bell Media grew 1.9 per cent to $850 million -- which was pushed up by higher ad revenue and subscriber declines offset by streaming revenue from Crave and sports services. Cope said the newly-rebranded Crave streaming service now boasts a total subscriber count of 2.3 million, a combination of linear broadcast and over-the-top subscriptions. Cope stated the service is profitable and now being carried by all major Canadian broadcast distribution undertakings. Bell Media’s operating costs meanwhile grew 1.7 per cent from Crave programming expansion and higher costs for sports broadcasting rights. Looking to the year ahead, Bell projected a one to three per cent growth in revenue for 2019. — With reporting by Kyle Duggan at kduggan@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Huawei ban wouldn’t delay BCE’s 5G rollout: Cope

News | February 7, 2019

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Huawei ban wouldn’t delay BCE’s 5G rollout: Cope

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