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China's ZTE wins two contracts despite corruption allegation

The company will build fiber networks in South Africa and Burundi

Despite mounting allegations of corruption and criticism of illegally bringing Chinese foreign nationals to work on its telecom projects in Africa, China's ZTE has been awarded contracts to build nationwide fiber networks in South Africa and Burundi.

In South Africa, Africa's second largest telecom market by investment and subscription after Nigeria, ZTE will build a 12,0000 kilometer (7,458 miles) fiber network by FibreCo Telecommunications, a joint venture between mobile operators Cell C, Convergence Partners and Internet Solutions. In Burundi, ZTE has been retained by Burundi Backbone Systems Company (BBS) to roll out a national backbone.

In Zambia, Uganda and Kenya, Chinese telecom companies are facing similar allegations of illegal entry of Chinese nationals and corruption in the acquisition of supply contracts.

"Chinese investors should limit the number of Chinese coming into Zambia," said Zambia President Michael Sata Tuesday after meeting with the Chinese ambassador to Zambia.

But despite allegations, Chinese companies have continued to be awarded telecom projects by operators and governments in the region. As in South Africa, the Burundi project is a joint venture between five telecom operators and the World Bank that has invested in the backbone.

The 13,000 km Burundi network will cover most of the country and will also link Burundi with Central and East African countries including Tanzania, Rwanda and the Democratic Republic of Congo (DRC). The network will further be connected to the East African Submarine Cable System (EASSY) under the Indian Ocean.

Competition in Africa's broadband market has been rife since last year, following the arrival of several undersea cables now servicing the region. The cable companies are competing for a share of Africa's lucrative broadband market, which has resulted in cheaper bandwidth.

African governments are, however, still pushing for further reductions in connectivity prices as a result of cheaper bandwidth in order to allow more people Internet access.

Burundi is among the African countries that have benefited from the World Bank's over $424 million in loans for the rolling out of broadband projects so that African governments can implement e-governance systems.

ZTE offices have twice been raided by South Africa's ministry of Home Affairs, which have led to several arrests of illegal Chinese workers using forged documents. As in many countries in Africa including Zambia, Namibia and Malawi, South Africa is grappling with Chinese nationals illegally entering the country for telecom jobs.

"Economically, it's not viable for the companies to use many Chinese workers," said Chinese Ambassador to Zambia Zhou Yuxiao.

The South Africa project will be rolled out in phases at a total cost of R5 billion (about $608 million) with the first link expected to be ready for use by 2013.

The project is expected to provide affordable, reliable and fast Internet access to South Africans through the open access principle, ensuring non-discriminatory access to the fiber network by operators. The open access principle is also expected to quickly down the high cost of internet connectivity.


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