Australia blocks Huawei from broadband bid

A Huawei Technologies Co booth at a product launch event on Feb 26 in Barcelona, Spain. [Chris Ratcliffe / Bloomberg]

Australia has blocked China's Huawei Technologies Co Ltd from tendering for contracts in the country's $38 billion National Broadband Network (NBN), claiming security concerns, Huawei said on Monday.

"We were informed by the government that there is no role for Huawei in Australia's NBN," said Jeremy Mitchell, a spokesman in Australia for Huawei, the world's No 2 telecommunications equipment maker.

NBN is a huge project that aims to connect 93 percent of Australian homes and workplaces with optical fiber, providing broadband services in urban and regional areas. It was created in 2009 by the Australian government with committed investment of up to $38 billion and is expected to be ready by 2020.

The Australian Financial Review said in a report on Monday that Huawei was seeking to secure a supply contract worth up to A$1 billion ($1.04 billion) with NBN, but the company has been blocked by Australia's Attorney-General.

When asked to comment on the report, a spokesman for Attorney-General Nicola Roxon said in a statement: "This is consistent with the government's practice for ensuring the security and resilience of Australia's critical infrastructure more broadly."

The government does not intend to comment on specific discussions with companies, which are confidential, he added.

The Australian Security Intelligence Organisation declined to comment on the report.

However, Australia's former foreign minister Alexander Downer, who is an independent director on the board of Huawei's Australian unit, rejected the government's security concerns.

"This sort of whole concept of Huawei being involved in cyber warfare, presumably that would just be based on the fact that the company comes from China. This is just completely absurd," he said on Monday.

On the sidelines of a nuclear security summit in South Korea, Australian Prime Minister Julia Gillard told reporters the government had made a prudent decision on NBN contract tenders.

"You would expect as a government that we make all of the prudent decisions to make sure that the infrastructure project does what we want it to do, and we've taken one of those decisions," she said.

The Shenzhen-based company has been struggling to expand in the United States, which also blocked its telecom equipment deals.

In 2008, a bid to buy 3Com by Huawei and Bain Capital Partners failed to win approval from a US government panel.

"While we're obviously disappointed by the decision (of Australia), Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology," the Chinese company said in a statement.

"We are confident we can work through this issue," Bloomberg News quoted Huawei's Mitchell as saying. "People aren't used to Chinese companies being leaders in this area, so we have to build up trust and understanding."

Huawei started its Australian operations in 2004 and has expanded its business across Australia, New Zealand and the South Pacific.