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Japan’s top three telcos to exclude Huawei, ZTE network equipment and this is a big trying time for the company but we hope they are able to survive it as they have contributed alot to the IT world when it comes to wireless technologies.

Japan’s big three telecom operators plan not to use current equipment and upcoming fifth-generation (5G) gear from China’s Huawei Technologies Co Ltd and ZTE Corp, Kyodo News reported on Monday.

The news, for which Kyodo did not cite sources, comes at a time of heightened scrutiny of Chinese tech firms by Washington and some prominent allies over ties to the Chinese government, driven by concerns they could be used by Beijing for spying. Last week, from sources that Japan planned to ban government purchases of equipment from Huawei and ZTE to ensure strength in its defences against intelligence leaks and cyber attacks.

A SoftBank Group Corp spokesman said Japan’s third-largest telco was closely watching government policy and is continuing to consider its options. The amount of equipment in use from Chinese makers “is relatively small”, he said.

Japan’s top two telecommunications operators, NTT Docomo Inc and KDDI Corp, said the firms had not made any decision yet.

Docomo does not use Huawei or ZTE network equipment, but it has partnered with Huawei on 5G trials. KDDI also does not use Huawei equipment in its “core” network, a spokeswoman said, adding it does not use any ZTE network equipment.

Asked to comment on the report, Huawei referred to a Japanese government policy document issued on Monday concerning cybersecurity during procurement. That document states the aim of a “free, fair and secure cyberspace”.

“These are ambitions Huawei shares and we look forward to continuing to work closely with customers in the Japanese market,” a Huawei spokesman said.

ZTE declined to comment on the report.

LOCKED OUT

Huawei has already been locked out of the U.S. market, and Australia and New Zealand have blocked it from building 5G networks amid concerns of its possible links with China’s government. Huawei has said Beijing has no influence over it. Japan’s decision to keep it out would be another setback for Huawei, whose chief financial officer was recently arrested by Canadian officials for extradition to the United States.

Chinese Foreign Ministry spokesman Lu Kang said China has already had “communication” with Japan about the issue.

China has all along been asking Japan to provide an open, fair and non-discriminatory environment for Chinese companies operating in the country, and Beijing will continue to pay close attention to this issue, Lu told a daily news briefing.

“We believe that Chinese companies’ normal operating activities should not be treated in a discriminatory way,” he added.

World financial markets have been roiled since news of the arrest, on worries it could reignite a Sino-U.S. trade row that was only just showing signs of easing.

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 percent.

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. Docomo and KDDI shares fell around 1 percent, in a wider market that closed down 2 percent.

Earlier, SoftBank’s Japanese telecoms unit priced its IPO at an indicated 1,500 yen ($13.31) per share and said it will sell an extra 160 million shares to meet solid demand, raising about $23.5 billion in Japan’s biggest-ever IPO.

Huawei Is Said to Plan $2 Billion Cybersecurity Reboot. China’s Huawei Technologies Co. is planning to overhaul its global software systems as it tries to avoid a ban in the U.K. and other European markets, after previous piecemeal fixes failed to assuage national security concerns, according to people familiar with the matter.

Huawei is set to commit at least $2 billion in spending to make its equipment less vulnerable to hacking and snooping, said the people, who declined to be identified because the discussions are private.

Huawei will offer to transform the way it engineers software, instead of merely applying one-off changes and workarounds in response to specific demands from companies and governments, and that work will continue until all security concerns are assuaged, they said.

The pledge comes at a critical moment for Huawei’s ambitions in Europe, its second-biggest market outside of Asia. European phone companies are on the cusp of ordering tens of billions of euros worth of equipment for fifth-generation wireless networks and Huawei has spent more than a decade positioning itself to win much of that work.

Its plans are now under threat as Western governments grow increasingly concerned that Huawei’s systems could be used as a Trojan horse by Chinese intelligence. Its reputation suffered a further blow when Chief Financial Officer Wanzhou Meng, the daughter of Huawei founder Ren Zhengfei, was arrested in Canada on Dec. 1 following allegations it had violated sanctions against Iran, amid a wider tussle on trade between the U.S. and China.

Huawei declined to comment. The company has always maintained that it’s independent and doesn’t give the government access to its equipment.

Company officials will present the details of the software revamp to Britain’s National Cyber Security Centre in coming days before it presents it to the public, said one of the people.

The measures would move beyond smaller-scale fixes it has made in response to a critical July report by a body staffed with intelligence officials and industry representatives.

In a sign of how tenuous Huawei’s position in the U.K. has become, the head of foreign intelligence agency MI6 said on Monday the government needs to decide whether Huawei should be banned from the country’s 5G networks.

In the last four months it has received bans on 5G from the U.K.’s intelligence-sharing allies Australia and New Zealand, led by a campaign from the U.S., where it is also banned.