Report: Ericsson to take slice of $1.6B Ethiopia deal after ZTE row

Ericsson is reportedly about to sign a contract to expand the telecoms network of state-run operator Ethio Telecom, taking a slice of an $800 million (€643 million) contract originally awarded to ZTE.

Chinese vendors ZTE and Huawei were selected in 2013 to build an LTE network in the capital, Addis Ababa, and help deploy 3G services throughout the rest of the country, with each vendor allocated a 50 per cent share of a contract worth $1.6 billion in total.

However, Reuters reported that Ethio Telecom and ZTE have fallen out over terms as they disagreed over the cost of upgrading an existing network, which Ethiopian officials had expected to be free of charge but ZTE said would cost an additional $150 million to $200 million

Both Nokia and Ericsson are understood to have been under consideration to take over some of the work. Ethio Telecom CEO Andualem Admassie has now told Reuters that discussions with Ericsson were nearing completion, although he did not indicate how much Ericsson's share might be worth. He did say that Huawei would continue in its role, and ZTE would also keep some of the work.

Ericsson declined to comment on the report.

Ethio Telecom is the only mobile operator in the country of more than 90 million people, with Ethiopia one of the last remaining countries in Africa to maintain a state monopoly in telecoms.

As well as rolling out LTE in the capital, the goals of the project include an increase in mobile service capacity to 59 million subscribers and improving total telecoms network coverage to 85 per cent, according to Ethio Telecom's statement from November 2013.

The arrangement also includes vendor financing since both companies will provide low-interest loans to Ethiopia. Reuters reported that the contract was awarded under a long-term loan package to be paid over a 13-year period with an interest rate of "less than 1 per cent."

For more:
- see this Reuters article

Related Articles:
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Ethiopia benefits from vendor financing in $1.6B deal with ZTE, Huawei
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