Vodafone's Italian unit has secured conditional approval from Rome to use equipment made by China's Huawei in its 5G radio access network, two sources close to the matter said.
Italy can block or impose tough conditions on deals involving non-EU vendors under "golden powers", which have been used three times since 2012 to block foreign interest in industries deemed to be of strategic importance.
The government of national unity led by Prime Minister Mario Draghi authorized the deal between Vodafone and Huawei on May 20, one of the two sources told Reuters, asking not to be named because of the sensitivity of the matter.
As in similar deals, the government imposed a set of prescriptions including restrictions on remote intervention by Huawei to fix technical glitches and an extremely high-security threshold, the source added.
Vodafone and Huawei declined to comment.
The United States has lobbied Italy and other European allies to avoid using Huawei equipment in their next-generation telecoms networks and to closely scrutinize rival ZTE, saying the companies could pose a security risk.
Huawei and ZTE strongly deny the allegations.
In the last 12 months, Italy has adopted a tougher stance on Huawei, while not banning it entirely from 5G infrastructure.
Under previous Prime Minister Giuseppe Conte, Rome prevented telecoms group Fastweb in October from signing a deal with Huawei to supply equipment for its 5G core network, where highly sensitive data is processed.
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