Chinese telecoms giant Huawei has been blocked from bidding for contracts on Australia's ambitious national broadband project, reportedly due to concerns about cyber-security.
Australian Prime Minister Julia Gillard defended the move as in the national interest, without commenting on the government's reasons for barring Huawei's involvement in the massive Aus$35.9 billion (US$37.5 billion) project.
"The National Broadband Network (NBN) is a huge infrastructure project... and you would expect that as a government we would make all of the prudent decisions to make sure that that infrastructure project does what we want it to do and we've taken one of those decisions," Gillard told reporters on the sidelines of a nuclear summit in Seoul.
A source familiar with the deal confirmed media reports that Huawei was told not to bother tendering for equipment contracts on the project late last year due to security concerns about cyber attacks from China.
Huawei, a major telecoms equipment maker founded by a former People's Liberation Army engineer, had reportedly been endorsed by the government corporation implementing the NBN, NBN Co., but Canberra intervened.
Attorney-General Nicola Roxon's office said the NBN, which aims to connect 93 percent of Australian homes to superfast fibre-to-the-home Internet by 2017, would become "the backbone of Australia's information infrastructure."
"As such, and as a strategic and significant government investment, we have a responsibility to do our utmost to protect its integrity and that of the information carried on it," a spokesman for Roxon told AFP.
Huawei expressed disappointment in the decision but said it was hopeful of playing a role in the NBN in future.
"While we're obviously disappointed by the decision, Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology," said Jeremy Mitchell, director of corporate affairs at Huawei Australia.
"Individuals and governments around the world are still coming to grips with the emergence of the new China which is an innovation leader," added Mitchell.
"While network security is an issue for all vendors, the real risk is missing out on the innovation China has to offer."
Mitchell said Huawei was involved in the building of broadband networks in Britain, New Zealand, Singapore and Malaysia and was "on track to become the world's largest telecoms equipment vendor" this year.
"You don't get to that level of success unless you have customers that trust your company, your staff, and your technology," he said.
Huawei's technology is used to build mobile phone networks around the world. It has repeatedly denied any links to the Chinese military, but has also run afoul of regulators and lawmakers in the United States.
Roxon's spokesman said Canberra's stringent approach to the network was "consistent with the government's practice for ensuring the security and resilience of Australia's critical infrastructure more broadly".
It is not the first time Asian cyber fears have hit major telecoms deals in Australia – the 2001 takeover of Cable & Wireless Optus by Singapore's SingTel was heavily scrutinised due to espionage fears.
Singtel's links with Huawei, a major supplier of its equipment, also dogged Optus's bid to run the NBN before the government decided to fund it as a state project.
The computers of Australia's prime minister, foreign and defence ministers were all suspected of being hacked last March, with the attacks thought to have originated in China.
Beijing dismissed the allegations as "groundless and made out of ulterior purposes".