GCSB Minister Andrew Little says the "national security risks", identified by the agency, in regards to Spark's planned 5G roll-out, relate to "intervention in an unauthorised way".
Telco Spark on Wednesday said it had been notified by the Government Communications Security Bureau that using Huawei RAN equipment in its introduction of 5G would raise a national security risk.
Despite the setback, the operator insisted the government's decision would not affect its plans to launch a 5G network by July 2020, provided new spectrum has been auctioned by that date. "Following our review, Spark will consider what further steps, if any, it will take".
Little said he had not been called upon to make any decisions on the matter. Earlier this year, it secured a 5G contract with United Kingdom mobile operator Three, which has previously relied on Nokia for 3G equipment and Samsung as a 4G supplier.
The GCSB's apparent move comes after reports earlier this week that the United States was pressuring allies to drop Huawei.
Hampton confirmed Spark's announcement in a brief statement.More news: Suspect in Hoover Galleria shooting arrested in Georgia
More news: Honda Passport returns as a ruggedly styled, 5-passenger SUV
More news: Hugh Jackman bringing world tour to Glendale in 2019
"Huawei is at the top of the game in terms of telecommunications infrastructure and equipment and if they are not part of a tendering process for some of these things in New Zealand there will be quality and there will be pricing issues that go with that", he said.
Opponents of the Chinese companies cite their apparent links to Chinese authorities and say their network gear could include "backdoors" for spying on citizens and government organizations in the West.
Huawei's 5G ambitions have encountered roadblocks in other countries.
"The process is the GCSB provides a technical assessment and evaluation to determine whether or not there is the possibility of a threat to national security".
In South Korea, SK Telecom, the country's largest mobile carrier, announced that it would not use Huawei's equipment for its 5G network.
In August, following the USA example, the Australian government has banned Chinese telecommunications companies Huawei and Zhongxing Telecommunications Equipment (ZTE) from supplying 5G technology to the country amid fears that foreign countries will be able to interfere in the country's communications infrastructure.
Huawei is China's biggest telecommunications and smartphone company.