But Morse IS PWM!
Dash: 1 longer. Dot: 1 shorter. Within-character delay - zero shortest, between-character delay - zero longer, space/word separator - zero longest.
Not quite the same way PWM is usually applied (frequently repeated very short cycles of rarely changed length), but quite similar.

I can imagine using extra PWM to generate the beep. In this case, just replace the PWM "on" call (beep) with SETB P1.7, "off" call (silence) with CLR P1.7.