New Zealand's Government Communications Security Bureau (GCSB) has told Spark that it cannot use Chinese networking vendor Huawei's technology to deploy its 5G network across the nation.
In a statement to the New Zealand Stock Exchange, Spark said it had notified the GCSB of its intention to use Huawei equipment in its 5G radio access network (RAN).
"The Director-General has informed Spark today that he considers Spark's proposal to use Huawei 5G equipment in Spark's planned 5G RAN would, if implemented, raise significant national security risks," Spark said.
"This means Spark cannot implement or give effect to its proposal to use Huawei RAN equipment in its planned 5G network."
"Spark has not yet had an opportunity to review the detailed reasoning behind the Director-General's decision. Following our review, Spark will consider what further steps, if any, it will take."
GCSB Director-General Andrew Hampton said the decision was made under the Telecommunications Interception Capability and Security Act (TICSA).
"I can confirm the GCSB under its TICSA responsibilities, has recently undertaken an assessment of a notification from Spark. I have informed Spark that a significant network security risk was identified," Hampton said.
"As there is an ongoing regulatory process, I will not be commenting further at this stage. The GCSB treats all notifications it receives as commercially sensitive."
Spark called the decision disappointing, but said it will not affect its plans to launch 5G by July 1, 2020.
The decision comes just a week after Spark and Huawei showcased a trial 5G network in Auckland, emphasising the separation of core and edge, with the companies already having achieved a 5G millimetre-wave (mmWave) call through the network.
Huawei said the multi-vendor trial network -- which consists of a Cisco evolved packet core and Huawei 5G NR and RAN -- had "fully isolated" each component.
"The Auckland live multi-vendor 5G trial emphatically proves it is possible to retain the critical access-core network separation, which enables operators such as Spark to operate in a multi-vendor network environment, and retains the ability of governments to regulate the vendor technology mix while maintaining a competitive market," Huawei New Zealand deputy MD Andrew Bowater said last week.
Huawei and ZTE were banned by the Australian government from playing a role in any 5G rollouts in August due to national security issues stemming from concerns of foreign government interference in critical communications infrastructure.
Huawei at the time slammed the Australian government's decision, saying the decision was not based in fact or a result of a transparent process, but rather, motivated by political instability thanks to infighting within the Liberal party.
Australian Signals Directorate (ASD) Director-General Mike Burgess last month said his agency had recommended the Huawei and ZTE 5G ban because the stakes surrounding 5G could not be higher, as it will see telecommunications networks move to the top of critical national infrastructure lists, and because of concerns that the separation between edge and core networks has diminished, meaning vendors cannot be confined to the edge.
"The distinction between core and edge collapses in 5G networks. That means that a potential threat anywhere in the network will be a threat to the whole network," Burgess said.
"In consultation with operators and vendors, we worked hard this year to see if there were ways to protect our 5G networks if high-risk vendor equipment was present anywhere in these networks."
"At the end of this process, my advice was to exclude high-risk vendors from the entirety of evolving 5G networks."
United States President Donald Trump has also been cracking down on Chinese involvement in the American tech sphere, including through draft legislation barring the sale of national security-sensitive technology to China, and blocking government or contractors from buying telecommunications equipment and services from Huawei and ZTE.
Huawei in July told the Federal Communications Commission (FCC) that the US should not miss out on its world-leading technology, pointing out that its exclusion would drive up consumer costs.
United States Senators Marco Rubio and Mark Warner then reportedly told Canadian Prime Minister Justin Trudeau to ban Huawei from taking part in its 5G networks.
Huawei in September denied similar reports that the Indian government had excluded it from taking part in joint 5G trials, saying it is currently proposing a set of solutions to support the government's requirements for a nationwide 5G rollout.
South Korea's largest carrier left Huawei off its list of 5G vendors, with SK Telecom announcing in September that it would be going with Ericsson, Nokia, and Samsung.
Huawei is still actively participating in 5G across the United Kingdom, however.