down not out

Don’t believe the ‘US-China’ narrative in the Ethio Telecom auction story

By Eric Olander

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Posted on May 25, 2021 10:42

Ethiopia has granted a telecoms operating licence to a consortium backed by US allies. It has been framed as a blow in the battle for influence between the US and China. But this misses important parts of the story, argues Eric Olander. Not least the arrival of Japan in the mix, and the fact that Huawei, while being down, is not out.

For years, U.S. officials have been trying to persuade African governments to abandon their reliance on Chinese-made telecom networking equipment from the likes of Huawei and ZTE. Finally, this weekend, they got their first win.

Well, kind of, sort of.

At least that’s how the Wall Street Journal and a number of others are interpreting the Ethiopian Communications Authority’s announcement on Saturday about the winning bid for one of two telecom licenses that have been up for auction.

The winning bid, an $850m offer (with a promise to invest $8bn over the next ten years) was won by a consortium led by Kenya’s Safaricom (56%) and Japan’s Sumitomo Corporation (30%) that also included financing from the U.S. Development Finance Corporation (DFC).

Washington is no doubt breathing a sigh of relief that the rival offer from South African telco MTN that had the backing of the state-owned Silk Road Fund of China came in far below at just $600m. More importantly, the DFC’s participation in the bid stipulated that no equipment from Chinese companies, specifically Huawei and ZTE, would be used to power the new telecom venture.

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