The long-awaited telecom expansion deal was signed this week between ethio telecom (ET) and the Chinese telecom giant Huawei Technology.
The other Chinese company, ZTE, which had been widely expected to feature in the deal and that have undertaken previous projects, was not represented.
The highly-anticipated 4G expansion project in Addis Ababa was awarded to Huawei, the first involvement it will have in this kind of project in Ethiopia.
ET officials said that ZTE had been expected to take part in the signing ceremony, but no representatives from the company were present at the event that was held at the Sheraton Addis on Thursday July 25.
ZTE officials refused to comment about the issues.
Government officials had previously noted that the project will cost 1.3 billion dollars, but the statement by ET states that the cost is 1.6 billion dollars.
The project is expected to be equally divided between the two companies, even though it had been expected that Huawei would take a bigger share.
Sources suggest ZTE, a state-owned Chinese company which took the previous 1.5 billion dollars telecom expansion project a few years ago, had reservations about the current contract.
There was confusion about why the company was not represented, as the press release issued at the signing ceremony referred to Ethio telecom having concluded a deal with both companies.
Sources at Huawei told Capital that the company heard about the signing ceremony on Wednesday July 24, the day before the event.
Debretsion Gebremichael, Deputy Prime Minister for economic cluster and Minister of Communication and Information Technology (MoCIT), told Capital that the government decided to award the 4G [long-term evolution (LTE)] project to Huawei.
Both Chinese firms competed fiercely to clinch the 4G project which is new for the country.
4G is the fourth generation of mobile phone communication technology standards and successor of 3G. A 4G system provides mobile ultra-broadband Internet access, for example to laptops with USB wireless modems, to smartphones, and to other mobile devices. Conceivable applications include amended mobile web access, IP telephony, gaming services, high-definition mobile TV, video conferencing, 3D television and cloud computing.
This project is a major part in the telecom sector of the Growth and Transformation Plan (GTP), which is due to be completed in 2015.
This project has been delayed for almost a year.
After the signing ceremony, Debretsion told journalists that the bid evaluation and detail negotiations were a long process. “Even though delays may have occurred, we will push the companies to accomplish the work within a short period of time,” he said.
He said that the government has been involved in evaluating the two companies after it cancelled the first bid opened in the early years of the GTP.
Around eight renowned international telecom companies participated in the vendor financing project, including the two Chinese companies.
The expansion project contract would enable ET to increase mobile service capacity from the current 23 million subscribers to 50 million and provide 4G access for Addis, as well as enable 3G service across the country.
The country’s overall telecom network coverage will also increase to 85 percent.
According to ET, mobile service core networks, power supply and network backhaul, transmission and fibre optic capacity were included on the first lot of the project.
The second lot included IP service, customer billing system, customer relations management system, next generation call centre, security operation centre, telecom fraud management and video surveillance.
The customer service supply will be undertaken by Huawei and ZTE will be eligible to undertake the sector of security operation centre and operation supply centre.
The Chinese telecom giant Huawei, which amassed USD 2.4 billion in total revenue, has huge investments in the telecom sector, including equipment production.
Sources at the company told Capital that the company would commence its equipment production for this specific project within a short time.
The new acting CEO of ET Andualem Admasse, and Jony Duon, his counterpart at the Chinese firm, signed the agreement.