Japan's Softbank Group plans to replace the equipment of the fourth generation network of two European companies rather than the equipment of China's Huawei Technologies, the Nikkei newspaper reported Thursday.
The move comes at a time when Chinese technology companies are under intense scrutiny from the United States and some of its leading allies over its links with the Chinese government, fearing that Beijing will use it for espionage.
Softbank, Japan's third-largest telecom operator, will seek equipment for its next generation mobile phone network from two European suppliers Nokia and Ericsson instead of Huawei.
A Softbank spokesman said the report "is based on speculation and no decision has been made yet."
Nokia and Ericsson are already senior Softbank suppliers.
Industry sources said the replacement of the fourth-generation equipment, which Nikki said would take several years, was likely to take time and be expensive.
The newspaper's report on the replacement of the supplier comes at a time when Softbank is preparing to list its communications unit on the Tokyo Stock Exchange on December 19.
Huawei is already barred from entering the US market, and Australia and New Zealand have blocked them from building fifth-generation networks, amid concerns about their possible connection to the Chinese government. Huawei says Beijing has no influence over it.
Japan's decision adds to Huawei's recent troubles after the Canadian authorities arrest its financial director.
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