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 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 United States, 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 telecom company brought in 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.”
“You cannot ignore the increases in the costs of handsets and the impact it has on consumers’ pocketbooks, because that impacts what they pay for wireless service,” said Bibic. BCE does not disclose average revenue per user (ARPU), an important indicator given the adoption of more unlimited data plans by users and the decline in overage fees.
A recent report by accounting firm PriceWaterhouse-Coopers said that the introduction of unlimited data plans by Canada’s big three telcos last year will reduce the price paid per gigabyte of data by 50 per cent between 2018 and 2020. The report also added that the reduction in overage fees would cost the telecom industry approximately $1 billion in revenue.
The company also added 35,639 new retail internet customers in its fourth quarter, though overall growth in its wireline division remained flat, due in part to a eight per cent decline in the number of retail satellite TV customers.
Revenue from its media division increased 3.4 per cent this quarter to $879 million, due largely to higher revenue from Crave subscriber growth which continues to be a steady growth segment for the company.
The company provided revenue growth guidance of one to three per cent for fiscal 2020, and projected adjusted EBITDA growth of two to four percent for the coming fiscal year.
Financial Post
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