Chinese telecoms giant ZTE lost its biggest contract in Germany, network provider Telefonica on Friday told AFP, as resistance mounts across the West to Beijing's infrastructure manufacturers.

ZTE's contract to maintain mobile operator O2's network, which is owned by Spain's Telefonica, "will come to an end as planned at the end of the year," said a spokesman for the German firm, confirming a report from business daily Handelsblatt.

In an interview with the newspaper, Telefonica Deutschland chief executive Markus Haas held back from criticising ZTE over quality problems that have plagued O2's integration of its network with competitor E-Plus over the past four years.

In future it will work with a much smaller German firm, Dortmund-based GfTD, rather than ZTE, he said.

Maintenance of masts and other infrastructure that makes mobile networks run is a "local service", Haas explained.

Also according to Handelsblatt, ZTE is looking to score a new big German contract with network provider United Internet as the country gears up to auction licences for upcoming 5G mobile internet frequencies.

The next-generation technology is expected to form the backbone of future applications like automated driving that could reshape the economy in the coming decades.

ZTE declined to comment on the report when contacted by AFP.

The Chinese firm's woes in Germany follow British telecoms group BT's announcement this month that it would move away from equipment provided by rival Huawei in its mobile network.

Huawei has been singled out by Western leaders for its alleged links to Chinese intelligence services.

The US government officially asked telecoms operators not to buy the firm's products early this year.

'No evidence' of Huawei spying, says German IT watchdog
Frankfurt Am Main (AFP) Dec 14, 2018 –

Germany's IT watchdog has expressed scepticism about calls for a boycott of Chinese telecoms giant Huawei, saying it has seen no evidence the firm could use its equipment to spy for Beijing, news weekly Spiegel reported Friday.

"For such serious decisions like a ban, you need proof," the head of Germany's Federal Office for Information Security (BSI), Arne Schoenbohm, told Spiegel, adding that his agency had no such evidence.

Huawei has faced increasing scrutiny over its alleged links to Chinese intelligence services, prompting countries like the United States, Australia and Japan to block it from building their next-generation, super-fast 5G internet networks.

The US has put pressure on Germany to follow suit, Spiegel wrote.

Schoenbohm said BSI experts had examined Huawei products and components from around the world.

They had also visited Huawei's newly opened lab in Bonn, where German clients can inspect the firm's cyber security measures and the software behind its products.

But some observers raised eyebrows at the BSI's apparent dismissal of cyber security risks concerning Huawei.

"I believe it's wrong to suggest that the concerns about Chinese espionage are unfounded and easy to detect," telecom security expert Ronja Kniep told AFP.

"Even if Huawei has no official relationship with the Chinese government, that doesn't mean Chinese services aren't using the company and its technology as vehicles for espionage."

All three of Germany's main mobile network operators use infrastructure provided by Huawei, Spiegel pointed out.

The Chinese firm is also the brand behind some of Germany's most popular mobile phones.