All data are collected in the Fiscal Year of 2008-2009.

China’s increased involvement in the African telecommunications industry is part of amultidimensional engagement in the continent to serve its broader strategy to enhance itsglobal standing, counter Western influence and to obtain resources and new exportmarkets to feed its rapidly expanding economy. Alongside construction, energy andmining, telecommunications is one of the four strategic pillars underpinning China’seconomic development and providing the necessary platform from which to challenge theWest for global hegemony.

It is therefore regarded a vital industry for Chinese strategic interests on several fronts:

Such assessments are closely driven by the Chinese Communist Party (CCP) and relatedministerial and strategic planning institutions which have as their primary mandate, theemergence of competitive international companies aligned with the strategic politicalconsiderations of the motherland. Importantly, Chinese telecom companies do not operatein isolation but operate in tandem with Chinese geo-strategic objectives. This makes theneed for effective countervailing strategies all the more important in dealing with Chinesetelecommunications challenge in Africa.

Initial assessments suggest that China has chosen several hubs from which to roll-out itstelecommunication strategy on the continent. These include Egypt, Algeria, TunisiaKenya, Nigeria and South Africa.

Leading the pack are Chinese heavyweight companies such as Huawei Technologies,Zhongxing Telecom Ltd (ZTE) – both linked to the Chinese military and intelligenceestablishments, China Telecom, and Alcatel Shanghai Bell (ASB). Improving technicalcapacity, linked to low costs of production, access to cheap state subsidized fundingsources and state political support provide such companies an important competitive edgenot available to independent telecom companies.

The links between telecom deals and China’s African strategy are not new. According toMark Natkin, managing director of Beijing-based IT and telecom consultancy Marbridge: “Chinese telecom vendors have identified opportunities in developing nations and canleverage their price advantage to develop relationships that vendors from rich countriescan’t be bothered with. China is taking a much longer-term approach that better integratesbusiness and political objectives. If you’re the company that gets in there and builds thecore network, you have a good shot at winning all upgrade contracts to follow. It’s likebetting on a portfolio of high-risk stocks. Many will be losing propositions, but those will beoutweighed by the few that take off”.

Importantly, Natkin added: “It might be coincidental, but many of the telecom deals doneby Chinese vendors in Africa and other developing countries have been with oil-producingcountries”. Part of Chinese economic penetration strategies into new markets is to letChinese oil companies act as the vanguard of Chinese business and later politicalinterests. Chinese oil companies allow for low-level intrusion into new markets withoutattracting unnecessary attention. But they inevitably herald an influx of governmentofficials, mainly from the intelligence community, to help assess both business and politicalopportunities in such countries. This has been especially evident in countries in Africawhich have not had diplomatic relations with Beijing, most notably Chad (prior to 2006)and Sao Tome Principe.

Compared to the established Western telecom gear-makers, Chinese companies offermore cost-effective equipment and solutions. In addition, according to Zhou Tao,executive vice-president of ASB, the Chinese Government's increasing financial support toAfrican countries is also giving a boost to the establishment of telecom infrastructure.

The Chinese government’s role was underlined in 2004 when Deputy Minister ofCommerce Chen Jian stated: “China will further expand telecom cooperation with Africannations in line with mutual benefits and common development. Moreover, the Chinesegovernment will support its telecom enterprises to run more telecom services in Africa."This in a nutshell explains the core of the Chinese telecommunication strategy in Africa.

Some important strategic indicators underlining the business threat posed by Chinese telecoms companies are the following:

The top African telecom markets for Chinese companies are Algeria, Egypt, Tunisia,Morocco and South Africa, comprising 60 percent of China’s total telecom assets on thecontinent. Outside of these, only Nigeria and Angola are becoming truly significant. Ofimportance here is that Chinese telecommunication developments in Africa have initiallyfocused on coastal countries – those that strategically straddle main shipping routes andstrategic choke-points – known in military parlance as sea lanes of communications(SLOCs). Tracking shipping movements, especially in times of war, suggests that Chinesetelecom investments in Africa closely follow global strategic considerations of the CCPwhen it looks at the global nature of its telecommunications strategy. It is of course not thesole motivating factor for its investment decisions related to telecoms, but it is a significantone.

A second tier of countries are those which provide market access or springboards forinvestment into other regional sectors of the sub-continent, or which are rich in energy andnatural resources, critical for China’s economic growth prospects. In the first instance,Kenya is a useful example, given its strategic location in East Africa. Sudan is an exampleof the second instance where its oil riches provide China with over 300 000 barrels of oilper day or some 7 to 8 percent of its total oil imports. Other second tier countries include:Angola, Ethiopia, Ghana, Ivory Coast, Tunisia and Zimbabwe.

There are important military and security considerations linked to China’s penetration ofthe African telecoms market. For example, the most important main fixed base related toBeijing’s space programme outside of China, entirely manned by PRC technicians andbuilt with Beijing money and technology, is the coastal Namibia tracking station inSwakopmund. Chinese companies responsible for the more sensitive construction tasksincluded: China Great Wall Industry Corp (CGWIC); China State Construction Group,Windhoek; China Aerospace Machinery and Electronics Corporation (CAMEC); and ChinaAerospace International Holding Ltd (CASIL).

Looking at the pattern of China’s penetration of the African market, the following emerges:

Against this background, the opportunities in the African market are obvious. For instance, the number of mobile phone subscribers in Africa hit 280 million in May 2008 (compared to 76,8 million in 2004 and just 7,5 million in 1998) representing a market penetration rate of over 30 percent. All the major Chinese companies already involved in the African market have categorically stated their intent to focus on Africa for future growth. Key to their future strategy in the market will remain competitive pricing, the expansion of wireless connections and partnerships with major western companies.

The African environment enjoys a positive outlook as far as the wireless market is concerned. 3G services have been commercially available since 2003 in Africa. Further 3G launches are expected. ZTE’s exciting TD-SCDMA system is destined for the African market after passing tests with flying colours last year. It was successfully tested at the Beijing Olympics, where ZTE was the largest supplier of TD-SCDMA handsets for the Olympics. The company supplied about 30 percent of the purchase order placed by China Mobile, thus making the company the biggest 3G provider of both network infrastructure and handsets of the global sporting event. The handset division was one of ZTE’s fastest growing units in 2007, with year-on-year sales revenues growing by 69,16 percent shipping over 30 million handsets in 2007.

Looking at the role played by foreign alliances in China’s entry into the African market, the following is noted:

Comtel was established by Comesa as an initiative to promote the establishment of a regional telecommunications network in the region. Registered in Mauritius on 26 May 2000, Comtel is set to save Africa $120 million each year, the amount paid to Western countries for the use of their telecom circuits for carrying international calls. Comtel will also introduce a direct telecom link between Comesa member states and other parts of the world. Currently, many calls from Africa have to pass through New York to get to Asia. The 20 Comesa members are Zambia, Zimbabwe, Kenya, Malawi, Namibia, Seychelles, the Democratic Republic of Congo, Egypt, Mauritius, Angola, Ethiopia, Uganda, Sudan, Rwanda, Swaziland, Burundi, Eritrea, Djibouti, Comoros and Madagascar. China’s participation in this project emphasizes the high priority being afforded to economic engagement with African countries in the field of telecommunications.

Cumulatively, the ICT sector in Africa attracted a total of almost US$3 billion of Chinese investment between 2001 and 2007. China’s involvement in the ICT sector in Africa mainly takes the form of equipment sales. In some cases, this involves normal commercial contacts between Chinese manufacturers and public and private operators in Africa. However, in some cases, it entails inter-governmental financing tied to purchases of Chinese equipment by state owned telecom incumbents.

While international attention has tended to focus on Africa’s new private operators such as Vodacom, MTN and Celtel, Chinese firms are emerging as key players in the supply of technology and equipment for networks typically to national telecom incumbents. By far the largest ICT project has been in Ethiopia (US$1,5 billion), which involved the associated rollout of mobile coverage in rural areas.

The four-year project, which was initially agreed upon in 2006, was to be undertaken by ZTE, Huawei, and Chinese International Telecommunication Construction Corporation (CITCC). It was expected that if completed, the project will more than double the country’s optical fiber deployment, more than triple mobile network expansion capacity, double rural telecom coverage, and quadruple the length of the fixed telephone network. In 2007, ZTE commenced construction of the fist two phases of the project. The three most active Chinese telecom equipment supply firms were state-owned ZTE Corp, privately held Huawei, and the mixed private-public 50-50 French-Chinese joint venture Alcatel Shanghai Bell. In most of the cases recorded by the database the state-owned Chinese banks directly provided the funds for the equipment to the host government. In some cases, ZTE was able to finance its deals through standing line of credit with China Ex-Im Bank of US$500 million, issued in 2004. Similarly, Huawei was granted US$600 million export seller’s credit from China Ex-Im bank, as well as US$10 billion in credit financing from the China Development Bank, both in 2004. It is important to stress that these lines of credit were given to the contractor firms for their worldwide operations.

A salient example of China’s ICT projects is the National Communication Backbone Infrastructural Project in Ghana, agreed to in June of 2006, whereby the China Ex-Im Bank is financing US$31 million of a US$70 million project initiated by the Ministry of Communications through a concessional loan. The project is aimed at rehabilitating and expanding fixed line communications technology in the country.

Huawei is the main supplier to telecommunication giants China Telecom and China Unicom, and one of the world’s ten-largest producers of telecom equipment. Its main products include switching systems, intelligent networks, Synchronous Digital Hierarchy (SDH) transmission networks, wireless, datacoms, broadband integrated services (BISDN), power supplies, and freespace optical systems. Company sources claim that “only” one percent of sales involve military customers, although this likely deflated number still represents more than US$30 million per year in equipment sales and service.

Huawei's products and solutions are deployed in over 100 countries and serve 31 of the world's top 50 operators, as well as over one billion users worldwide. In 2006, it had annual revenues of US$8,2 billion and over 44 000 employees. Over half its revenues came from overseas sales (US$ 4, 8 billion).

Huawei is often described as “a Chinese firm with close ties to Beijing's military and a history of illicit exports and industrial espionage”, an allegation it vehemently rejects.

Originating from the Number 691 electronics factory under the China Aerospace Industry Corporation (CAIC), Zhongxing Telecom (ZTE) has grown to become China's largest listed telecommunications equipment manufacturer and wireless solutions provider. It lists shares in Hong Kong and Shenzhen and is China's second-biggest telecom equipment vendor after Huawei Technologies Co. The company develops and manufactures telecommunications equipment for fixed, mobile, data and optical networks, intelligent networks and next generation networks as well as mobile phones. The company has aggressively expanded in developing markets by exporting networking products, establishing joint ventures and investing in local communication operations. ZTE Chairman Li Taifong publicly confirmed in October 2006 that the African market has been targeted by the company as its “next business hub." ZTE has established three WiMAX R&D centers in America and China since its WiMAX operations began in 2002. With more than 400 R&D personnel dedicated to WiMAX operations, ZTE owns a growing patent portfolio in the WiMAX field.

Alcatel-Shanghai Bell (ASB) is one of the biggest telecommunications equipment and solution suppliers in Asia. ASB is the Chinese flagship company of Alcatel-Lucent in Asia Pacific. It is the first foreign invested company limited by shares in China’s telecommunications industry, with extensive global resources. ASB benefits from Alcatel- Lucent’s comprehensive next-generation (NGN) portfolio. In 2007 ASB teamed up with Datang Mobile (which initially developed TD-SCDMA network solutions) to provide TD-SCDMA to Chinese service provider, China Mobile. Datang and ASB deployed TD-SCDMA for China Mobile in Shanghai and in the southern city of Guangzhou. ASB provided the Node B equipment to be used in the network.

China Mobile Limited, China’s largest telecoms company, was listed on the New York and Hong Kong Stock Exchanges in 1997. As the leading mobile services provider in China, the group boasts the world's largest unified, contiguous all-digital mobile network and the world's largest mobile subscriber base. In 2006, the Company was once again selected as one of the "FT Global 500" by Financial Times , and in the "The World's 2000 Biggest Public Companies" by Forbes Magazine . In April 2007 China Mobile indicated that it planned to buy companies in Africa and Southeast Asia as growth accelerates in those regions. However, it denied reports that it was planning to buy a stake in South African based mobile player, MTN Corp. However, sources confirm that for a period, MTN was the target of some sort of Chinese acquisition attempt. [See below]

Algeria is one of China’s key strategic allies in Africa. The two main reasons for this have to do with oil and the war on terrorism.

On the energy front, Algeria was the first African country visited by Chinese President Hu Jintiao during his first ever overseas trip after becoming president in 2003. He touched down in Algiers in early February 2004 and signed several agreements related to the energy and telecommunications sectors within the broad framework of a new strategic cooperation agreement.

However, China was already active in Algeria’s telecoms industry prior to Hu Jintao’s . visit. Huawei was established in Algeria in 1999 and today has access to over 80 percent of all the operators and private network markets in Algeria. The company is the biggest CDMA wireless local loop (WLL) system and terminal provider in Algeria, and provided Algeria Telecom with a wired and wireless integrated CDMA WLL network solution, which adopts an integrated switch centre (C&C08) that can merge with Algeria Telecom's existing PSTN. In addition, the network can connect with Honet, fixed telephone line, ADSL and other vendor's CDMA WLL equipment, making it extremely flexible and requiring less start-up costs to construct the Algerian access network which covers 7 provinces through 113 000 lines.

In April 2003 Huawei was tasked with expanding Algeria's GSM network in 14 regions.

In 2005, Huawei won the bid of the purchased items for the next generation backbone transmission network equipment from Algeria Telecom. This project’s backbone transmission network will cover all territories within Algeria, which requires the network and equipment to be able to provide abundant data service characteristics, intelligent characteristics, and high reliability of next generation network oriented applications. Huawei won the project thanks to its customized ASON-based OptiX OSN system.

In March 2007 Huawei was selected by the Algerian federal railway - Société Nationale des Transports Ferroviaires (SNTF) to provide a GSM-R communication solution for the 220 kilometer-long Tabia-Mecheria railway line, an important passenger transport route in Algeria. In terms of the contract Huawei will provide GSM-R network design and engineering services to SNTF, with ALSTOM supplying the railway signalling system. When completed, the Tabia-Mecheria line will be Algeria's first modern railway equipped with world-class GSM-R technologies.

In May 2007 Huawei officially launched the CDMA 2000 1xEV-DO network in Algiers, the capital of Algeria. With Huawei's LiteFME solution, Algeria Telecom's PSTN, CDMA WLL network and ADSL network can be converged, including CRBT (Colour Ring Back tone), EV-DO data service, pre-paid portal for EV-DO service, video phone in fixed network and Integrated Centrex, which is a PBX-like service for enterprise users. [Note: Earlier in 2007 Algeria Telecom launched three new services, 'ADSL Assila Pack Pro 3000', 'ADSL Assila Pack Pro 4000' and 'ADSL Assila Pack Pro 8000' for its business customers with speeds up to 8 Mbps.] Other developments include:

ZTE In 2003, ZTE secured a contract to build Africa´s largest CDMA WLL in Algeria, after presenting a bid for a mobile network that was 18 to 21 percent less expensive than comparative bids made by US companies. The final contract was worth US$32 million, for a first phase of installation, with several spin-offs. Prices were kept low by the company, due to a Sinosure supported Industrial and Commercial Bank of China (ICBC) “soft loan” – a classic example of state subsidized Chinese deals. This deal included the construction by ZTE of two CDMA WLL networks, which cover 43 provinces in all eight districts of Algeria.

In October 2004 ZTE announced that it was to open a manufacturing facility in the country (for wireless fixed terminals and other equipment) in cooperation with local company INATEL.

By 2005, the company had provided a national CDMA network covering 95 percent of the country (including the three provinces of Tizi Ouzou, Bouira and Bejaia in northern Algeria). The new network involves a Mobile Switching System (MSS), Base Station System (BSS), Packet Data Serving Node (PDSN), Operation and Maintenance Center (OMC), a repair centre, a training centre and a software support centre.

In 2006 ZTE was awarded a contract to supply optical network equipment to ATM Mobilis, the largest mobile operator in Algeria with 1,2 million subscribers at the time. Under the contract, ZTE is to provide its optical products including transmission equipment, power supply, optical network management software and SDH/PDH analyzers.

With a population of over 60 million, Egypt is the third largest mobile market in Africa after South Africa and Morocco. The Egyptian mobile market is dominated by two private operators, MobiNil and Vodafone Egypt. MobiNil and Vodafone were for years the only providers for mobile telecommunications before the Emirates-based Etisalat was chosen as the third provider offering third generation (3G) services in 2006.

In 2002 the Ministry of Communications and Information Technology of Egypt and the Ministry of Information Industry (MII) of China signed a memorandum of understanding aiming at the development of the ICT industry in both countries.

Huawei entered Egypt in 2000 and its Middle East and North African operations are headquartered in Egypt. Huawei also has a training centre in the country. Telecom Egypt used Huawei's TELLIN solution to build a Fixed-line Intelligent Network (FIN) that covers the whole country. Huawei enabled Telecom Egypt to provide CDMA WLL services to both fixed and mobile subscribers, including voice and data services, with a network capacity of 100 000. In addition, Telecom Egypt built a MSAN (Multi Service Access Network) nationwide comprising 500 000 lines which made use of Huawei's Honet access network solution. Telecom Egypt also deployed Huawei's OptiX 10G equipment to build the core Cairo Metropolitan network, which has more than 50 nodes. In 2006 Telecom Egypt and Huawei signed an agreement to manufacture CDMA wireless local loop terminals.

Huawei used Raya NS (RNS) to undertake the turn-key installation of Huawei CDMA2000 WLL switches and base stations in Upper Egypt and Suez Canal regions to expand Telecom Egypt telephony services to remote areas.

Egypt’s IN Hardware Installation Network supplied by Huawei Technologies covering 8 sites: Roda, Abbassia, Alexandria, Suez, Tanta, Mansura, Sohag and Menia, were also implemented by RNS. RNS further completed the installation of 4 fibre optics rings covering 17 sites along with its network management system. RNS was awarded the installation by Huawei which received the contract to perform the first trial for 10G and 155/622M fiber optics transmission equipment.

In 2005 the Egyptian Company for Mobile Services (Mobinil), Egypt's leading mobile service operator and Huawei started to work on Softswitch trials in Egypt and finished the first call on this trial mobile network during this period. Mobinil signed a commercial contract with Huawei in 2006 to expand the network capacity to 5 million prospective customers. [Note: Mobinil which was the first equipment supplier to introduce Softswitch technology into 2G/3G mobile core network commercial construction, selected Huawei for the provision of its core network. Mobinil’s shareholders are Orange and Orascom Telecom Holding.]

In 2006, Telecom Egypt selected Huawei to provide Dense Wavelength Division Multiplexing (DWDM) technology. This technology enables multiple video, audio, and data channels to be transmitted over one fibre and increases the efficiency and bandwidth of networks by supporting different formats. The three year contract will increase the capacity of Telecom Egypt’s Cairo network and reduce operating costs while increasing quality of service.

Emerging demand for advanced, higher-quality communications poses a paradigmshifting challenge to telephone operators. Originally designed to carry circuitswitched voice traffic, existing networks now need to carry heavy data loads, deliver streaming video, and provide Internet access to a rapidly growing user base. The decision to evolve our network is significant and is the result of in-depth research and analysis. Huawei offers industry leading transmission network architecture with its DWDM technology and enable us to give our customers access to new, advanced services while enhancing the security and quality of existing services.

The Huawei DWDM equipment has been applied to over 250 national and inter-city transmission networks. In the Middle East, Huawei DWDM Technologies have been widely adopted in many countries like the UAE, Saudi Arabia Oman, Tunisia, Algeria, and Morocco.

In 2005, Huawei Technologies inaugurated a regional technical assistance centre and a training centre in Cairo, aimed at educating partners, customers and sub-contractors of the company’s extensive portfolio of telecoms equipment. The training facility covers an area of 300 square metres and comprise13 classrooms and labs, with a capacity of 150 trainees at any given time. On its opening, a total of 58 training programmes were available.

At the time, Tian Feng, vice president of Huawei Technologies boasted that “our entry into Egypt four years ago and our knowledge and experience is equal to the best in the world” and added that “the strategic location of Egypt is important to us”. The total size of the investment in the two centres amounts to US$20 million.

On 6 May 2004, ZTE and Huawei won a contract to launch a mobile phone network using CDMA technology in Egypt after fighting off fierce competition from other global giants. The contract, signed between the two Chinese companies and the Egyptian Communications Company (ECC), aimed to launch the CDMA mobile phone network to serve up to 100 000 users at a cost of more than US$20 million.

The ECC picked the two Chinese firms after inviting an international tender that attracted seven global telecommunication companies. According to ECC’s Chairman Okail Bashir, the selection was not based on low prices only, though prices are one of the important criteria, but technical efficiency which was the essential element.

The first phase of the project entailed 48 000 lines in the Delta and 52 000 lines in Cairo’s 16 suburbs. Phase II includes the establishment of an 800M core network along with an access network and fixed wireless terminals. In 2005 ZTE signed a further contract to expand the CDMA WLL network to 100 CDMA WLL.

Angola has become one of China’s most important telecoms market in recent years. The largest player in the country is ZTE.

In 2005 ZTE deployed its first ever Africa commercial WiMAX network in Angola following an agreement of US$69 million signed with Mundostartel (MST), Angola's second largest fixed-line operator. ZTE provided Mundostartel with the equipment to build a nationwide WiMAX network. The network covers three cities (Luanda, Benguela and Lobito) and provides broadband and VoIP services for more than six million people. It will eventually be deployed in 8 provinces. It was also the first time that ZTE installed an NGN based on an IP platform with CDMA2000 1x and EV-DO technology.

Under the terms of the agreement, ZTE supplied MST with its end-to-end WiMAX solution including base stations and CPEs (Customer Premises Equipment) which offer scalability to an 802.16e (mobile WiMAX) network, roaming support architecture and product serialisation.

ZTE said the network would provide NGN technology, which allows analog services like traditional fixed-line voice calls to be carried on the same network as digital signals such as mobile telecom traffic. It would be among the first of its kind in Africa.

[Note: Mundo Startel has the license to roll out fixed-line telecommunications network in Angola and intends to increase its market share up to 40 percent by 2010. Telecom Namibia owns 44 percent of MST and contributed US 4,2 million of the original US$9,7 million in equity costing of the wireless network.]

In November 2006, Angola’s Prime Minister Peido Nandó visited the Shenzhen ZTE HQ where he was presented with the firm’s new generation proposals for Angola. ZTE has 100 people working full time in Angola and is now eyeing the Sao Tomese market. With projects in Angola currently worth US$400 million ZTE has been working on a NGN access network, Intelligent Optical Terminal (IOT) and GSM/CDMA networks, with Angola Telecom (the largest telecommunications company in the country) and MSTelem as its local partners. It has also been working on a classified secure telecoms network for Angola’s Armed Forces (FAA), valued at around US$80 million, because the military’s top brass are dissatisfied with the state of secure communication connections to command centers.

In 2002 Alcatel Shanghai Bell (ASB) and Angolan Telecom signed a US$60 million contract to expand and optimize the telecommunication network in south and east Angola (Namibe, Huile, Cunene and Lunda Norte). The deal covered design, project, products and equipment solutions.

Shanghai Bell provided Alcatel S12 switching equipment, Litespan integrated access equipment, SDH622M and SDH155M optical transmission equipment and optical and electric cable. It was also commissioned to set up a satellite earth station and reconstruct 4 satellite earth stations and all the exterior lines for Angolan Telecom. [Note: The construction and installation started in 2005. Japan Telecommunications Engineering and Consulting Service (JTEC) managed and supervised the installation.]

In 2005 CITCC completed four phase projects for the improvement of Angola Telecom’s telephone network in Luanda. CITCC also built 42 km of new telecom ducts, laid 366 km of telephone cables, and supplied telephone lines for 200 000 people.

Huawei is present in 6 Angolan provinces, where it has invested US$7 million to build a training centre of telecommunications technologies and upgrade the ITEL (School of Telecommunications Technologies) at the University of Telecommunications. The university is currently under construction in Luanda.

Huawei has also introduced NGN, access network, intelligent optical transmission, GSM, CDMA and datacom products to Angola.

It has signed cooperation framework agreements with Angola Telecom and MSTelcom.

Another critical area for Chinese telecom development in Africa, South Africa serves as the head-quarters and logistics centre for both ZTE and Huawei on the continent. The Huawei Sub-Saharan command centre in Johannesburg is particularly impressive, located on the 1st floor, Building 28, The Woodlands, Woodmead in Johannesburg. Huawei also has a Technical Training Centre in South Africa, co-manned by Telkom.

Chinese firms are busy in trying to bring in South African technology to Beijing and Shanghai, and to establish joint ventures with big operators like MTN, in third countries where they have lower prospects of competing.

Huawei first entered the South African market in 1998 in Pretoria, and relocated to Johannesburg in 1999. A training initiative with the University of Cape Town (UCT) is currently underway, and it will seek to supply basic and advanced product training to telecoms engineers. Huawei has supplied the university with the necessary equipment needed to operate a fully functional Huawei training facility.

Huawei is Telkom's only strategic partner for its 21CN integrated access network, providing an access platform integrating voice, IP and video. Furthermore, Huawei provides Vodacom with advanced 3G terminals and CellC with high-end IP networks and value added services. Huawei also became a strategic global partner of MTN in 2005, having signed a 3-year framework agreement worth US$600 million, featuring communications equipment provision and service. Huawei is also listed as the first partner to be chosen by the fixed network operator SNO. The Government of the Northwest Province has also purchased and implemented an IP WAN from Huawei.

Huawei has focused much attention on training programmes. For example, the company cooperated with Telkom to support South Africa's "Talent Plan" by funding Zululand University, and providing postgraduate students with education funds and research subjects.

Huawei has also set up an IP network training and certification centre in UCT to provide free IP engineering, technical training and certification for South Africa and surrounding countries. Over the past year, the centre has provided successful training and certification for more than 100 people.

Furthermore, on 6 August 2008 another training centre was opened in South Africa located in Woodmead. This facility brought the number of Huawei training centres in Africa to five, with the other facilities located in Nigeria, Kenya, Egypt and Tunisia. At the end of 2007, over 4000 Africans had graduated from these centres.

ZTE entered the market through Vodafone Group plc, then a 50 percent share-holder in South Africa's Vodacom in May 2007. Vodafone unveiled ultra-cheap cell-phones, aimed at bolstering its position in emerging markets and at offering an alternative to Nokia and Motorola's cheapest handsets. The second-generation, or 2G, phones, called the Vodafone 125 and the Vodafone 225, are the fruit of Vodafone's recent partnership with ZTE. [Note: Vodafone is also working with Huawei on 3G handsets and with Sagem, the phone-manufacturing unit of France's Safran, on an ultra-cheap GSM handset.]

For a period in 2007/early 2008, rumours persisted that China Telecom, the country's largest fixed-line telecommunications operator by users, was planning to buy a stake in South African mobile operator MTN Group. According to European sources, the Chinese takeover of MTN had long been planned. First it was thought that an umbrella group of enterprises should do it at the end of 2005. Then the plan was for China Mobile to make a bid with heavy China Eximbank financial support.