Asia Business Channel

Japan's top 3 telcos will shun equipment from China's Huawei and ZTE

Bowing to pressure from the U.S. and Japanese governments, Japan's big three telecom operators – KDDI Corporation, NTT Docomo Inc. and Softbank – have announced that they will not use current equipment and upcoming fifth-generation (5G) equipment from China's Huawei Technologies Co Ltd and ZTE Corp,

Japanese sources told Reuters News that Japan planned to ban government purchases of equipment from Huawei and ZTE to ensure strength in its defenses against intelligence leaks and cyber attacks.

The news on the tree telcos agreeing not to use Huawei and ZTE equipment, comes at a time of heightened scrutiny of Chinese technology firms by Washington and its allies over belief that all Chinese technology companies operate under government supervision and that their technologies contain backdoors that allow the Chinese government to spy on governments, companies and individuals.

Huawei has already been locked out of the US market and Australia and New Zealand have also blocked the company from building 5G networks in their countries amid concerns of links the firm has with China's government.

In Japan, a spokesman for SoftBank Group Corp said that the company was closely watching government policy and is continuing to consider its options. According to the spokesman, the amount of equipment in use from Chinese makers "is relatively small.”

The situation for Japanese teleco NTT Docomo is more complicated since the company has partnered with Huawei on 5G trials. For KDDI, a spokesman said the issue is not of concern since the company does not use Huawei equipment in its "core" network, or use any of its equipment.

Industry sources said SoftBank would find it difficult to replace pre-existing Huawei network equipment that is designed for the company and not easily interchangeable. Shares of SoftBank, which has the deepest relationship with Huawei among the big Japanese telcos, fell the most among the three top Japanese telcos on Monday, ending down 3.5%.

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