On Tuesday, in a significant development, Swedish regulators have banned China’s Huawei and ZTE from developing its 5G network ahead of the launch of its spectrum auction, scheduled for next month.

The decision by the Swedish Post and Telecom Authority (PTS) follows assessments by the by the Swedish Armed Forces and security service.

Following widespread concerns, European governments have been reviewing the role of Chinese companies in building their networks. Intelligence agencies have stated on multiple occasions that they pose a security threat given that Chinese companies and citizens must, by law, aid the state in intelligence gathering.

Sweden’s security service called China “one of the biggest threats against Sweden”.

Neither Huawei nor ZTE immediately responded to requests for comments.

The ban will benefit telecom equipment makers Nokia and Ericsson.

In a statement PTS made it absolutely clear that all Swedish companies taking part in the auction will have to remove all Huawei and ZTE gears from their existing central functions by January 1, 2025. It defined central functions as “equipment used to build the radio access network, the transmission network, the core network and the service and maintenance of the network”.

The license conditions were made following assessments made by the armed forces and security service, said PTS.

While Sweden had originally planed to launch the auction of the 5G spectrum in early 2020, it got delayed because of a security review.

In April PTS had announced that it would commence the auction of the 5G spectrum in November.