SPKKY Spark New Zealand Limited (PK)

By Dan Strumpf in Hong Kong and Rachel Pannett in Sydney 

Chinese telecommunications giant Huawei Technologies Co. has been blocked from supplying a 5G mobile network in New Zealand, a fresh setback as a U.S. campaign to shun its equipment intensifies.

Spark New Zealand said Wednesday that the Government Communications Security Bureau had told it that its plan to use Huawei equipment in the network--which Spark is due to complete by July 2020--would "raise significant national-security risks."

Huawei "is aware of Spark's statement and we are looking into the situation," a Huawei spokesman said. The world's largest maker of telecommunications equipment, Huawei is a major supplier of gear for next-generation 5G networks, which will offer higher speeds and help connect an expected boom in internet-connected devices.

Huawei has been effectively locked out of major U.S. telecommunications networks for years over fears its equipment could be used to spy on Americans--an assertion Huawei has long denied--and The Wall Street Journal reported last week that the U.S. has been trying to persuade wireless and internet providers in allied nations to follow suit.

Security bureau Minister Andrew Little told the Journal that New Zealand's decision wasn't influenced by any U.S. pressure.

"There have been no exchanges that I've been involved in with U.S. officials [about] what we should or shouldn't do in relation to 5G technology," he said. He added that if Spark still wants to use Huawei equipment in its 5G network, it has the option of working with the agency to mitigate any security risks.

"At some point, we'll get an indication about what they want to do next, " he said.

Spark said it is reviewing the security bureau's decision and will "consider what further steps, if any, it will take."

In August, Australia's government barred Huawei and China's ZTE Corp. from participating in the country's 5G mobile network.

Despite opposition from Australia, the U.S. and Japan, though, Huawei is set to complete construction of an internet network in Papua New Guinea, which dismissed concerns about cyberspying.

New Zealand, with a population of nearly 5 million, is a member with the U.S., Canada, the U.K. and Australia of the so-called Five Eyes intelligence-sharing alliance. Other members have taken hard stances on Huawei gear, but New Zealand has long shrugged off security concerns about the equipment and allowed it to be installed essentially without limits.

Speaking at the company's annual meeting earlier this month, Spark's managing director, Simon Moutter, urged the government not to bar Huawei without "incontrovertible evidence their technology presents security risks."

Huawei joined with Spark on its 3G and 4G mobile networks--including providing equipment at cell sites that transmit and receive signals to and from mobile devices.

"I haven't seen anything on the policy front to restrict an operator from using a specific infrastructure vendor before" in New Zealand, said Phil Marshall, chief research officer at Tolaga Research, a telecom research firm there. "It's a departure."

Mr. Marshall said it is possible that Spark will work with the government and find a way to allow Huawei equipment in its 5G network. But "at the moment the political pressure is pretty strong and is stacked against Huawei," he said.

Write to Dan Strumpf at daniel.strumpf@wsj.com and Rachel Pannett at rachel.pannett@wsj.com

(END) Dow Jones Newswires

November 28, 2018 04:27 ET (09:27 GMT)

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