A Telekom spokesperson said the report was "contrary to the reality", adding that the firm had actually scaled down its Huawei business over the past three years, Reuters reported. Handelsblatt said a Huawei spokesman had said the firm had never sought to hide its close relationship with Telekom.
Tuesday's report claimed as its source confidential documents that showed Telekom had increased its take-up of Huawei gear for its 5G network and broadband expansion, cloud and TV offerings. And it also said Telekom had requested Huawei to help it gain a technological edge over its competitors.
The two companies had also come to a deal to step up reliance on US-free network equipment for Telekom's network, it was alleged.
Telekom has said in the past that it does not back a blanket ban on any foreign telecommunications vendor as this would reduce its ability to be flexible. Last month, the German Government said it not set the final rules for 5G networks until September at the earliest.
The US website Politico, which also ran a story based on the Handelsblatt report, claimed internal records showed a deal had been done for Huawei to take action to avoid supply chain disruption and cover any potential price increases.
Such increases have been feared since the US said in May that it would make changes in its Foreign Direct Product Rule which prevents a company from buying goods that are produced using American technology or equipment, no matter whether the firm making them is American or not.
Strict imposition of this rule would make it impossible for Huawei to obtain advanced semiconductors which it uses in its 5G base stations, among other products, from any firm that uses US equipment or technology – and most do.
A Telekom spokesperson was quoted by Politico as saying: "We are already pursuing a multi-vendor strategy for the network elements used all over our networks. We buy from a variety of vendors like Ericsson, Nokia, Cisco, Huawei and many others."
Germany holds a 14.5% stake in Telekom and there have been warnings from other firms that angering China would lead to retaliation that would hit their profits.
iTWire has contacted Huawei Australia for comment.