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Japanese mobile carrier SoftBank Group Corp. is reportedly changing its hardware from Chinese telecommunications giant Huawei Technologies Co. Ltd. in its 4G telecoms network infrastructure over the next few years – and will instead use equipment from Finland’s Nokia Corp. and Sweden’s Ericsson.

SoftBank, the only telecom carrier in Japan that uses Huawei equipment, is also expected to order hardware for its next generation 5G networks from the two European companies instead of Huawei, a Japanese news outlet reported, without citing sources.

Nokia and Ericsson are already huge suppliers to Japan’s third-largest telecommunications firm.

The 5G network is the next telecommunications means that will help further accelerate data transfer and enable more devices to connect to the internet.

The news outlet also reported that Japanese Prime Minister Shinzo Abe stated that it is extremely important to avoid buying equipment that includes malicious functions like stealing or destroying information or halting information systems.

A spokesman for SoftBank said the report was based on speculation and no decision has been made.

Among Japan’s top three telcos, SoftBank has the longest running relationship with the Shenzhen-based tech company, but it previously stated that the amount of equipment it uses from Chinese makers is relatively small.

Industry sources have described the 4G hardware switch, which is expected to take several years to complete, as time-consuming and expensive.

National Security Concerns

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The report comes at a time of heightened scrutiny of Chinese tech companies by the US and some major allies over possible relations to the Chinese government, prompted by worries they could be used by Beijing for spying.

Japan, a close ally of the US, was reportedly planning to ban government purchases from Huawei and other major Chinese telecom equipment maker ZTE Corp.

Huawei has resolutely reiterated that Beijing has no influence over it.

The decision by the Japanese government to exclude Huawei would be another problem for the company, whose chief financial officer, Meng Wanzhou, was recently arrested by Canadian officials for extradition to the US.

A Canadian court on Tuesday granted bail to Meng in a move that could help ease Chinese officials.

The latest move also reflects growing concerns over security leaks and other issues.

UK multinational telecom firm BT Group plc announced last week that it will prohibit Huawei from supplying technology for the core 5G network it is developing. The company confirmed that it has been removing Huawei hardware from the core of its 3G and 4G networks since 2016.

Australia and New Zealand have blocked the Chinese group from participating in building their 5G networks as well.

SoftBank’s supplier change also came as it prepares to list its Japanese telecoms business in the Tokyo Stock exchange on December 19.

SoftBank recently set the final price of its ¥2.65 trillion ($23.5 billion) initial public offering (IPO) at an indicated price of ¥1,500 ($13.22) per share and said would include an overallotment of 160 million shares to meet demand.  Overall, the firm is selling 1.76 billion shares.

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