Both Singtel Optus and Vodafone Hutchison Australia — the second and third by market share in Australia — use Huawei gear in their 4G networks and the deployment of equipment from the same company has been expected to give them an advantage over their main rival – Telstra.
The government, in a joint statement made by Acting Home Affairs Minister Scott Morrison and Communications Minister Mitch Fifield on Thursday, said having any companies involved in the rollout who were subject to foreign laws that were in conflict with Australian law was too big a risk.
VHA chief strategy office Dan Lloyd said the decision was a significant change "which fundamentally undermines Australia's 5G future, and we will consider what it means for our business".
"We have always said that national security is paramount. We always have and always will meet our obligations under Australian law," Lloyd added.
"However, major decisions of this nature need to be made with rigour, accountability and careful consideration of the economic, productivity and social implications for the country."
Optus' vice-president for Regulatory and Public Affairs Andrew Sheridan struck a more positive note over the Huawei ban.
"Optus welcomes the certainty that the government’s 5G security guidance provides to the industry," he said. "Optus has a mix of vendors in its mobile network and we remain well-positioned to lead in the delivery of 5G services."
Optus recently questioned Telstra's claim that it is the first Australian network provider to be 5G ready, saying the lack of commercially available 5G devices means no provider can claim leadership in this race right now. This came after Telstra boasted that it had switched on what it said were Australia's first 5G services, covering parts of the Gold Coast.
Sheridan added: "Optus shares the government’s objectives of ensuring the security of Australia’s information, communications and critical infrastructure.
"Our track record demonstrates collaboration with government, departmental agencies and vendors to develop appropriate controls and safeguards to ensure that our network and services remain secure. Optus will comply with the guidance."