STOCKHOLM, Dec 16 (Reuters) – A Swedish appeals court said on Wednesday the telecoms regulator could resume 5G spectrum auctions but also ruled that China’s Huawei [RIC:RIC:HWT.UL] could pursue a legal challenge over its exclusion, which was prompted by security concerns.

The regulator, PTS, said in November it was halting 5G spectrum auctions to challenge a court decision that ruled against its decision to ban China’s Huawei and ZTE (000063.SZ) from Sweden’s 5G networks, citing national security risks.

Sweden’s move follows similar steps by Britain and other Western nations to ban or restrict Huawei’s role in the 5G rollout. The Chinese firm has denied U.S. allegations that its technology poses a security risk.

The Swedish auctions, previously delayed for the security review, will allocate frequencies in the 3.5 GHz and 2.3 GHz bands, crucial for 5G as those bands can support advanced applications due to their high data carrying capacity.

PTS said in a statement that Wednesday’s ruling meant it could hold the auction “but PTS needs to make contact with the participating actors. This means the auction will not start now during December.” It did not set a date for the auction.

Kenneth Fredriksen, Huawei’s executive vice president for central east Europe and the Nordic region, told Reuters he did not expect the regulator to proceed until another court ruled on Huawei’s challenge to its exclusion.

He said that “the uncertainty that remains basically makes it impossible to have a good and predictable auction.”

Huawei filed its case in an administrative court.

The auction is crucial for the deployment of the 5G network, a technology which promises to enable everything from self-driving cars to remote surgery and more automated manufacturing.

Senior appeal judge Anita Linder said Wednesday’s decision meant PTS could hold the auction with special rules regarding Huawei.

The Stockholm administrative court of appeal said in its ruling that PTS’ rules had a detrimental effect on Huawei’s sales but a delayed 5G expansion “risks having negative consequences for the Swedish business community by losing competitiveness” with others abroad.

Telecoms operator Telia (TELIA.ST) welcome the decision to allow an auction to be held soon. “It is important that Sweden does not fall behind even more in the rollout of public 5G networks than it already has,” Chief Technology Officer Staffan Åkesson said.

Reporting by Helena Soderpalm and Supantha Mukherjee; editing by Niklas Pollard

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