Huawei and ZTE set to sign $1.3 billion Govt. telecom contract in Ethiopia

Telecom Lead Africa: Huawei Technologies and ZTE, which are facing bottlenecks in the U.S., is set to sign $1.3 billion government telecommunications contract in Ethiopia.

The selection of Huawei Technologies and ZTE by the Ethiopian government signals that the entire world is not considering to boycott to the Chinese telecom equipment makers.

Besides the U.S. and Canada, U.K. is also doing its own scrutiny. The longstanding commercial relationship between BT and Huawei is being investigated by parliament’s intelligence and security committee, its chairman Sir Malcolm Rifkind has confirmed to the Guardian.

In a move that could cause disruption to major broadband and mobile phone infrastructure projects in the UK should security fears be raised about Huawei’s equipment, the committee is reviewing the whole presence of Huawei in regard to our critical national infrastructure and whether that should give rise for concern.

With a population of almost 90 million, Ethiopia is Africa’s second most populous country. Its mobile market almost tripled in 2011, and yet market penetration is still less than half the African average, so enormous growth potential remains.

Both the Chinese companies had submitted the bid jointly for the two- year contract.

“Both companies will be engaged. Both will have a share in the market,” said Communication and Information Technology Minister Debretsion Gebremichael. However, the government official did not disclose the size of the contract.

The country’s broadband market is also set for a boom following massive improvements in international bandwidth, national fiber backbone infrastructure and 3G mobile broadband services. After years of low uptake due to prohibitive pricing, retail prices are now comparable to other markets in the region that are already more developed.

Ethiopia is also the latest low-cost location for mobile phone manufacturing. Three companies have started manufacturing in the country with a combined capacity of almost five million units per year and will soon start exporting to other African markets.

The first locally manufactured smartphone is expected to hit the market in the second half of 2012. Another 20 companies have been licensed for local mobile phone manufacturing. The government is encouraging foreign investment in a broad range of industries by allowing up to 100 percent foreign equity ownership.

ZTE has worked with Ethiopia’s state-owned monopoly provider Ethio Telecom over the past six years to improve phone and Internet services in the country. Ethopia is Africa’s second-most populous nation.

The companies will finance the project that includes more than doubling the number of mobile-phone users to 40 million by mid-2015.

The Ethopian government is not investing in the network. They are inviting companies to come with their finance.

Agreements including technical details and how to divide the work between the companies should be made within two weeks.

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