Canadian telecoms spent $700M on Huawei tech while Liberals delayed ban decision

Canadian telecom companies spent more than $700 million on Huawei equipment while the Liberal government delayed a decision on banning the Chinese company on national security grounds, Global News has learned.

Huawei’s Canadian sales of radio access network equipment — the gear that connects mobile phones or computers to networks — came in at roughly $300 million in 2018 and “slightly more” than $300 million in 2019, the company said.

The company sold around $100-million worth of the equipment to Canadian telecommunications companies in 2020 — all while the Liberals suggested a decision on banning Huawei was imminent.

With that decision now expected in a matter of weeks, Global News has confirmed that multiple telecommunications companies have approached the federal government for “compensation,” should they have to replace all that Huawei gear.

And the significant presence of Huawei equipment in Canada’s telecommunications networks means even if the Liberals “ban” it from participating in next-generation wireless networks, the company is likely to have a presence in Canadian networks for years to come.

“Although Canadian operators have announced different 5G partners for their future network buildout, the reality right now is that Huawei equipment remains in current networks in most major Canadian cities, and many remote regions of Canada,” said Alykhan Velshi, Huawei Canada’s vice president of corporate affairs.

“Our focus will remain on serving our customers who have our gear in their current network.”

The Liberal government has been reviewing Huawei’s potential participation in 5G networks since 2018. Close security allies — including the U.S., U.K. and Australia — have either banned or severely restricted Huawei’s presence in their respective countries, concerned the Chinese telecom company could be ordered to spy for Beijing.

Huawei has vigorously disputed those concerns, as have Chinese Communist Party officials. But Canada has been under intense pressure to exclude the company from future 5G participation, particularly by the U.S. government.

Banning Huawei equipment outright could mean significant costs for telecommunications companies like Bell, Telus and SaskTel — who are all widely believed to employ a significant amount of Huawei tech.

But Christopher Parsons, a cybersecurity researcher with the University of Toronto’s Citizen Lab, said he would be surprised if the contracts between Canadian telecommunications companies and Huawei did not include some kind of compensation — in the event the Liberals decide to exclude Huawei from Canadian networks.

“It would be very interesting to understand … if there’s anything in there that says ‘if the federal government of Canada bans Huawei, then the equipment be returned to Huawei at some sort of a discount,’” Parsons said in an interview.

“If that were the case, then it would indicate that all the parties are aware the deck chairs are still in motion.”

A government source who was not authorized to speak publicly told Global News Wednesday that multiple telecommunications companies have approached the government to discuss “compensation” should the Liberals decide to ban Huawei — a detail first reported by the National Post.

The source said Ottawa has told those companies the conversation is premature — given the government has yet to make a decision on Canada’s 5G future, despite more than three years of study.

Prime Minister Justin Trudeau said Wednesday his government continues “to follow the advice of our experts, our intelligence and security analysts.”

“We’re working with the various telcos to ensure there’s a competitive environment, but the safety and protection of Canadians is always there (in the discussion),” Trudeau told reporters.

Without naming Huawei, a spokesperson for Industry Minister Francois Philipe-Champagne said the long-awaited review into Canada’s 5G future will carefully consider Canada’s “allies’ advice.”

“We have been clear that we will pursue an approach that takes into account important domestic and international considerations, and that we will make the best decision for Canadians,” wrote John Power in a statement Wednesday.

Huawei’s Velshi — who previously worked as a senior staffer for both Prime Minister Stephen Harper and for the Ontario PC Party — said he hoped the government’s eventual decision will be made “on technology and not politics.”

The comments come as Britain’s foreign intelligence chief Richard Moore gave a rare public speech on Tuesday warning about the risks posed by Chinese “debt traps and data traps.”

Moore, who heads up MI6, said China is now for the first time “the single greatest priority” for British foreign intelligence operatives, and noted countries allowing Beijing access to their critical data will over time “erode your sovereignty.”

Documents obtained by Global News through access to information laws show military intelligence staff are part of the Canadian groups that have been working to understand the impact on Canada of Huawei and allied policies on Huawei 5G access.

But military officials offered little clarity on the nature of that role when asked for details.

“The Department of National Defence (and) Canadian Armed Forces … works closely with our (government) partners and allies to provide subject matter expertise and intelligence analysis/support on national security matters on an as-required basis,” said a spokesperson.

“The content of CAF intelligence reports and briefings is classified. For security reasons, we cannot comment on the content of intelligence reports or briefings that we receive or share.”

Canadian intelligence officials have for years avoided naming names when it comes to the countries that pose a security threat to national interests. But there are signs that the posture of secrecy by default is beginning to change.

In early 2020, CSIS director David Vigneault singled out both China and Russia as two of the countries that are “aggressively” targeting Canadians in an attempt to gain geopolitical advantages.

“You may think to yourself, ‘I’m not a national security person. I’m a scientist, a business person, an academic and so on. I’m not interested in geopolitics,’” said Vigneault in a February 2020 speech.

“Well, I can say with some confidence that geopolitics is interested in you. And it’s important that you know how you can be at risk and how you can protect your interests.”

Vigneault specifically highlighted the pursuit by Beijing of data stored digitally — as he described it, “research held on computer systems in small startups, corporate boardrooms, or university labs across the country.”

Champagne raised the issue of trust in high-tech during an interview with The Canadian Press on Nov. 8, saying that Canada only wants to work with “trusted” partners on technology projects. While he did not name Huawei, the comment has been interpreted since as a reference to the firm.