Ethiopia admits problems with ZTE contract: European vendors could benefit as Ethiopia falls out with Chinese firm over mobile network deal.

November 21, 2014 | Total telecom | By Mary Lennighan

Ethiopia is at loggerheads with ZTE over an US$800 million mobile network contract and is working on a 'plan B' involving Europe's big two telecoms vendors.

The country's state-owned incumbent Ethio Telecom split a $1.6 billion 3G and LTE deal between ZTE and Huawei last summer. Now ZTE is at risk of losing a portion of the deal for various reasons, including a disagreement over the cost of upgrading legacy kit, the Ethiopian telecoms minister told Reuters this week.


"We have contractual issues unresolved," the newswire quoted communications and IT minister Debretsion Gebremichael as saying. "Swapping existing technology with no additional costs is one," he added.

The minister explained that the government expected ZTE to upgrade existing equipment at no extra charge, while the Chinese firm plans to charge an extra $150 million-$200 million.

While there has been talk in the media over the past week or so of ZTE losing the contract, Ethio Telecom's chief executive Andualem Admassie confirmed that the Chinese firm will not be frozen out of the whole deal, the newswire said.

However, Ethiopia is working on a plan B that could see ZTE's share of the spoils shrink.

Ethio Telecom has approached Nokia Networks and Ericsson about replacing ZTE in part, Andualem said, adding "possibly it is going to be Ericsson."

He did not expand on what ZTE might cede or the European vendors gain though.

Ethio Telecom will make its decision on the matter in the coming works, Reuters said.