New Zealand's electronic intelligence agency has told the country's largest internet company it can't use technology from China's Huawei to upgrade its network due to significant security concerns.
Telco Spark on Wednesday said it had been notified by the Government Communications Security Bureau that using Huawei RAN equipment in its introduction of 5G would raise a national security risk.
GCSB director-general Andrew Hampton said in a statement "a significant network security risk was identified" but would not comment further.
Western spy agencies have increasingly raised suspicions about Huawei - China's biggest telecommunications company - over what they say are possible links to the Chinese government, with the United States reportedly pressing Five Eyes intelligence network allies, including New Zealand, to avoid the company.
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The company has repeatedly denied there is a security risk.
Australia's government has shut Huawei out of contracts to build its own network on security grounds and in July blocked the company from laying cable from Sydney to Papua New Guinea and the Solomon Islands.
The New Zealand government minister responsible, Andrew Little, on Wednesday said Spark could now propose changes to mitigate the security dangers.
"Due to commercial sensitivities and reasons of national security I am unable to provide any details as to the GCSB's concerns or speculate as to possible ways to prevent or mitigate those risks," he said.
A Huawei spokesman described the situation as an ongoing process.
"We will actively address any concerns and work together to find a way forward," he said.
Spark said in a statement it would review the decision before deciding if further steps were needed and that, while disappointed, it was confident of meeting its 2020 network rollout target.
