By Moira Warburton and Neha Malara
TORONTO/BENGALURU (Reuters) - Two of Canada's largest telecoms firms on Tuesday teamed with Sweden's Ericsson (ST:ERICb) and Finland's Nokia Oyj (HE:NOKIA) to build fifth-generation (5G) telecoms networks, ditching China's Huawei Technologies for the project.
Bell Canada (TO:BCE) and smaller rival Telus Corp (TO:T) eschewed Huawei, which analysts said would ease the Canadian government's thorny decision on whether to allow the company into Canada's 5G network.
Bell, Canada's second-largest cellphone provider by wireless revenue, announced it would partner with Ericsson for its core 5G network. Previously, it said Nokia (NYSE:NOK) would provide other parts of its 5G tech. Telus picked Ericsson and Nokia as its equipment suppliers, the company said in a separate statement. Rogers (NYSE:ROG) Communications (TO:RCIb), the other dominant telecoms operator, has already partnered with Ericsson.
Last week, a Canadian court dealt a setback to Huawei Chief Financial Officer Meng Wanzhou as she tries to avoid extradition to the United States to face bank fraud charges.
Canada, which is reviewing security implications of 5G networks, has yet to decide on allowing Huawei to provide equipment for them.
The announcements put "a real monkey wrench into the spanner" for Huawei's business ambitions in Canada, said Lawrence Surtees, lead research analyst on communications at IDC Canada.
Although Huawei has contracts with smaller companies, and continues to provide some tech for Bell's network, the two companies "are substantial contracts and it's a nice piece of business for whoever gets it," he said.
Huawei said it supports Bell's strategy of selecting multiple equipment suppliers, referring to the Canadian telecom firm's relationship with Huawei to supply other network components.
Telecoms companies were in a bind due to the government's indecision.
"There is now equipment certainty and the use of multiple suppliers is an excellent strategy to help stimulate innovation and discipline pricing," Mark Goldberg, a telecoms industry consultant, said.
On Tuesday, Telefonica (NYSE:TEF) Deutschland (DE:O2Dn) picked Ericsson to build its 5G core mobile network in Germany, saying the choice would safeguard the security of its next-generation services.
(This story in paragraph 3, corrects Bell's description to Canada's second-largest cellphone provider by wireless revenue, not Canada's largest cellphone provider)