All is not well in Uganda’s telecom sector shortly after we learnt about the closure of Vodafone Uganda, ZTE Uganda has also let go of all its staff due to the current ban imposed on the Zhongxing Telecommunications Equipment company by the US government.
Early this month, the ZTE Uganda’s Human Resource manager Daniel Balaba connived an emergency meeting where he announced the sad news to all staff that the company was terminating all their contracts with immediate effect. According to the Ugandan laws a person is supposed to be given a month’s notice before they are dismissed from their job. Since ZTE Uganda had delayed to implement the ‘firing’ directive from their headquarters, the company decided to compensate the employees this month in lieu plus another three months salary in advance. The HR manager advised those employees who feel grieved by the company’s decision to try to seek legal means if possible if they feel this in unlawful dismissal.
ZTE has several obligations to its clients like Airtel and MTN Uganda. They have been managing MTN’s network after they won the contract at MTN Group beating other vendors like Huawei and Ericsson to the punch. Several former MTN employees were taken up by ZTE after MTN Uganda outsourced the Chinese company to manage it’s network. This has all come to an end for them as the HR. This means MTN will have to give this contract to another company or take it back in house.
Why ZTE was banned by US
The Chinese telecom equipment company has ties to the Chinese government and the US Department of Commerce in April announced a seven year ban on ZTE after it was discovered they were allegedly illegally exporting products containing U.S.-sourced components to Iran and North Korea.
The company has about $17 billion in annual revenue, and has decided to downsize and also close off some of its operations in several countries. The Commerce Department also blocked its access to American-made components until 2025, saying the company failed to punish employees who violated trade controls against Iran and North Korea.
ZTE phone are not popular in Uganda but according to a Reuters report, ZTE’s US ban may also cost the Chinese company its Android license as well. ZTE can still use bare bones Android but they will not be able to use Google’s Android services like Maps, GMail, and other Google Play Services including the Google Play Store. The ban also expends to other components like mobile processors made by US based Qualcomm.
The USA and China have had long standing battles when it comes to the progress and advancement on 5G technology (the technology meant to bring yet faster internet to mobile devices and homes) and it seems China had leap-forged the US. Pundits say this is the State’s way on putting the Chinese in place in order for them to maintain its superiority in this technology.
Effect on Uganda’s Telecom industry
ZTE and Huawei have over 90% of contracts in Uganda’s telecom companies due to the low cost of their equipment and services. It should also be noted that Huawei is also reportedly under criminal investigation by the US for possible export control violations to North Korea and Iran.
If the same happens to Huawei as well, this means telecom companies will have to outsource services or buy equipment from more expensive vendors like Ericsson or Nokia (Alcatel) which in the long run will be pushed to the end users of telecom services.
