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Wednesday, November 26, 2014

Ethiopia Seeks Tech Companies to Share Chinese Mobile Contract

Ethiopia Seeks Tech Companies to Share Chinese Mobile Contract

Ethiopia will give other companies parts of a telecommunications project it awarded to ZTE Corp. (000063) after a contract dispute with the state-owned Chinese company, Communications and Information Technology Minister Debretsion Gebremichael said.

The government has held talks with Helsinki-based Nokia Oyj (NOK1V) and Ericsson AB of Sweden about them taking over segments of the contract, which seeks to double mobile-phone network capacity in the Horn of African country and expand 3G coverage nationwide by June, Debretsion said.

“We’ve already started negotiations with Ericsson and Nokia,” he said by phone yesterday from the capital, Addis Ababa. “We didn’t sign as we have to close the issue with ZTE before getting into any other major contractual agreement.”

Neither ZTE nor Nokia immediately responded to e-mails seeking comment. Ericsson doesn’t comment on “rumors or speculations,” spokeswoman Elisabeth Mansi said by e-mail.

Ethio Telecom, the state-owned monopoly provider, in July 2013 signed deals worth $1.6 billion with ZTE and China’s Huawei Technologies Co. to improve Internet and phone services. In line with a previous ZTE contract, the companies agreed to provide most of the financing themselves from Chinese lenders.

ZTE’s work has been delayed by at least six months after it rejected a “mandatory” provision to upgrade existing infrastructure at no extra cost as it expanded networks, Debretsion said. Although the company has now agreed to the condition, other firms need to be involved to make up for lost time, he said.
Completing Work

ZTE “will not be the only one to complete the remaining work that is apportioned to them,” Debretsion said.

About 27 percent of Ethiopia’s 90 million people had mobile-phone subscriptions in 2013, compared to 71 percent in neighboring Kenya, according to International Telecommunications Union data. The percentage of Internet users in Ethiopia, Africa’s second-most populous nation after Nigeria, was 2 percent last year, while in Sudan, another neighbor, it was 23 percent.

The government says it retains control of telecommunications to ensure investment is focused on extending basic services to rural areas and because it needs the revenue to build infrastructure.

Ethiopian officials have talked to Ericsson and Nokia about how they would “fit into the gaps we have” and told them they would need to access financing, Debretsion said.

To contact the reporter on this story: William Davison in Addis Ababa at wdavison3@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net Michael Gunn, Sarah McGregor, John Bowker

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