UPDATE 2-NZ intelligence agency rejects first Huawei 5G bid, cites security

That echoed Australian concerns that, with 5G, it was difficult to confine vendors considered high risk to a network's less sensitive parts.

New Zealand's intelligence agency has rejected the telecom industry's first request to use 5G equipment provided by China's Huawei Technologies Co Ltd , citing a security risk.

Telecommunications services provider Spark New Zealand Ltd , which made the request, on Wednesday said it would review the reasoning before considering any further steps.

The decision comes as Western nations become increasingly wary of what they say is possible Chinese government involvement in fifth-generation mobile and other communications networks. Huawei has repeatedly insisted Beijing has no influence over it.

Earlier this year, neighbouring Australia banned Huawei from supplying 5G equipment, also citing security risks. Last week, the Wall Street Journal reported the U.S. government was trying to persuade companies in allied countries to avoid Huawei.

"I have informed Spark that a significant network security risk was identified," Government Communications Security Bureau Director-General Andrew Hampton said separately on Wednesday.

Intelligence services minister Andrew Little told Reuters that Spark - whose request was part of the country's first 5G application - could work with the agency to mitigate risk. He declined to specify the concerns, citing classified information.

Huawei did not respond to a Reuters request for comment.

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Huawei has been involved in other telecommunications systems in New Zealand such as its 4G mobile network, and is investing NZ$400 million ($271.88 million) into research and development.

Little said each decision regarding telecom technology was made separately under telecom and security legislation.

"The difference between 5G networks and conventional 4G and 3G networks is the configuration of the technology," Little said. "With 5G technology, every component of the 5G network means every part of the network can be accessed."

That echoed Australian concerns that, with 5G, it was difficult to confine vendors considered high risk to a network's less sensitive parts.

Spark rival 2degrees said it had noted the decision and was "seeking clarity on it".

"The importance of multiple vendors to deliver price competitiveness still stands, so if this announcement has a similar impact on 2degrees it will be a real disappointment for competition," 2degrees corporate affairs chief Mathew Bolland told Reuters.

Vodafone New Zealand Ltd declined to comment on the matter. ($1 = 1.4712 New Zealand dollars)

(With inputs from agencies.)