By MATTHEW DALTON
The Ethiopian government has warned ZTE Corp. that it may cancel a huge contract it awarded to the Chinese telecommunications firm last year, amid concern about the prices ZTE is proposing to charge for its equipment, people familiar with the negotiations say.
Ethio Telecom, Ethiopia’s government-controlled, monopoly telecommunications operator, has been in contact with Swedish telecommunications giant Ericsson and Nokia Corp. as possible replacements for ZTE, these people said. But Ethio Telecom has already started to award parts of ZTE’s contract to its Chinese rival, Huawei Technologies Co., an indication that the entire contract may be awarded to Huawei, said a person familiar with the moves.
The contract in question, worth around $800 million, is to provide mobile-phone base stations and other equipment to upgrade and expand Ethiopia’s mobile network.
The dispute between Ethiopia and ZTE is the latest problem to hit the country’s rickety communications network over the last eight years, during which ZTE has been the country’s main supplier of network equipment. Cancellation of the contract would also be another blow to ZTE’s business in Africa, where several countries have annulled contracts awarded to the firm because of concerns that it violated government purchasing rules, acted improperly or wasn’t up to the job.
Neither ZTE nor Ethiopian officials responded to repeated request for comment.
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