ZTE could lose Ethiopian network upgrade contract over cost dispute

19 Nov 2014

Chinese vendor ZTE Corp is reportedly at risk of losing part of a deal worth USD800 million to expand state-owned Ethio Telecom’s network as result of a dispute over the costs of upgrading existing systems, according to Reuters. Ethiopia’s Communications and Technology Minister Debretsion Gebremichael was cited as saying of the matter: ‘We have contractual issues unresolved … Swapping existing technology with no additional costs is one.’ While the state had reportedly expected ZTE to upgrade existing equipment without any additional charge, it is understood that ZTE has now said such work will cost between USD150 million and USD200 million more. Meanwhile, in the wake of these claims it has also been suggested that either Ericsson or Nokia Networks could step in and replace ZTE on the network upgrade project.

As previously reported by CommsUpdate, in August 2013, and less than a month after it had inked a separate USD700 million agreement with Huawei with a view to expanding the country’s mobile infrastructure, the Ethiopian government completed a USD800 million deal with ZTE. Under this deal ZTE agreed to roll out a 4G network in the capital Addis Ababa, while also expanding Ethio Telecom’s existing 2G and 3G networks. Andualem Admassie, acting chief executive officer at the incumbent operator, was cited as saying at the time that the agreement would enable it to double the number of mobile subscribers on its books to more than 50 million, noting: ‘The expansion is vital to attain Ethio Telecom’s objective of increasing telecom service access and coverage across the nation, as well as to upgrade existing network to new technology.’

Ethiopia, Ethio Telecom, ZTE