China’s Huawei excluded from Czech tax tender after security warning

January 30, 2019

By Jason Hovet and Robert Muller

PRAGUE (Reuters) – China’s Huawei [HWT.UL] has been excluded from a Czech tender to build a tax portal after the country’s cyber watchdog warned of possible security threats posed by the telecoms supplier, documents showed on Wednesday.

Huawei faces international scrutiny over its ties with the Chinese government and allegations that Beijing could use Huawei’s technology for spying, which the company denies.

The U.S. Justice Department has charged Huawei with conspiring to violate U.S. sanctions on Iran and with stealing robotic technology from T-Mobile US Inc.

The Czech Finance Ministry amended a tender for a new tax portal for filing returns, documentation on online registries showed.

The ministry said the tender could “not allow producers that are subject to a current warning by the NUKIB,” referring to the Czech cyber security agency.

The agency in December warned network operators and other key institutions against using software or hardware made by Huawei or China’s ZTE [ZXXTE.UL], saying they may pose a security threat.

“A warning from (NUKIB) is by law binding for the Financial Administration and we are obligated to carry it out,” a spokesman for the Finance Ministry’s General Financial Directorate said.

The tender is valued at 500 million crowns ($22 million) according to the Mlada Fronta Dnes daily newspaper which first reported Huawei’s exclusion.

A NUKIB warning does not constitute an outright ban but requires 160 public and private operators of critical infrastructure to conduct an analysis of risks and act accordingly.

Huawei had been seen as a favorite in the tax portal tender. A local Huawei representative could not immediately comment.

Huawei’s products have so far not been banned or excluded from planned upgrades of Czech mobile networks to next-generation 5G technology.

The company has already started testing some networks with Vodafone and testing MIMO (multiple-input and multiple-output) technology with T-Mobile.

Last November Huawei signed a memorandum of understanding on testing 5G solutions with investment group PPF.

PPF controls Czech and Slovak operator O2 Czech Republic, Czech network provider CETIN and last year bought Telenor’s mobile operations in Bulgaria, Hungary, Montenegro and Serbia.

Huawei has been publicly backed by Czech President Milos Zeman, who has long promoted close cooperation with China, while Prime Minister Andrej Babis has called for a debate on cyber security at the European Union level.

($1 = 22.5380 Czech crowns)

(Reporting by Jason Hovet and Robert Muller; editing by Alexander Smith and Jason Neely)