Will the New Telecom Project «NX» Deal a Fatal Blow to the Houthis?

On August 21, 2023, the Yemeni Cabinet approved a draft agreement to establish a telecom company that would provide mobile and internet services in Yemen. It was signed by Yemen’s Public Telecommunication Corporation and the Emirati company ‘NX Digital Technology’. The agreement included the approval for granting a “license to provide mobile phone services, and to operate and license the frequency spectrum”, according to the state news agency 'Saba'.

This telecom network project, which is considered the first of its kind in the Yemeni government areas, is worth $700 million. It is also considered to be the largest venture in the telecom sector in areas away from the control of the Iranian-backed Houthi militias, who have imposed almost full control on the telecom sector from Sanaa since 2015. However, some objections were raised by parties affiliated with the internationally recognized government. They have alleged the project violates legal and security parameters and asked to halt it.

The project has triggered a storm of debates, figuring Yemeni Prime Minister (PM) Maeen Abdulmalik and the outgoing Yemeni parliament. This came in the wake of a 73-page report released by the Parliamentary Fact-Finding Committee on August 24 citing "serious governmental violations" in sectors such as electricity, oil, and telecommunication. This was followed by a five-page letter from the Yemeni Speaker of the Parliament, Sultan Al-Burkani, submitted to PM Maeen Abdulmalik.

The letter claimed that the telecom project "violates the constitution, facilitates plundering of the state’s resources and strips it of its sovereign, legal and financial rights". In parallel, Presidential Leadership Council (PLC) Member Othman Majali and Yemeni Interior Minister Ibrahim Haidan sent similar letters criticizing the project and called for halting it.

On the other hand, the Southern Transitional Council (STC) has supported the project. Its President Aidrous Al-Zubaidi hailed the government's approval of the project as "an important move to free the telecom sector from the Houthi grip". Besides, PLC Member Abdulrahman Al-Muhrrammi issued a statement supporting the project. Meanwhile, PLC Member Tariq Saleh told the media that he stands by any project that would end the Houthi hegemony over the telecommunication sector.

During a press conference on September 4, in the Maashiq Palace in Aden, Prime Minister Maeen Abdulmalik dedicated nearly 30 minutes to speak about the project's controversial points. Abdulmalik criticized the Yemeni Parliament, describing its report on the project as being part of political polarization. He also refuted many allegations against the project. Abdulmalik accused “some corrupt influential forces” of trying to stop the project.

Some media platforms, backed by the Islah Party and the Houthis, spread rumors claiming that the project is linked to the expansion of Emirati influence in Yemen. Some rumors drew a connection between the project and the UAE-Israeli normalization. There were also allegations that 'NX Digital Technology’ is affiliated with Israel. They claimed that a joint Emirati-Israeli team arrived in Aden to start the implementation of the project.

While one can understand the Houthi reasons behind targeting the project, the motives of the Yemeni Parliament and other officials lack such clarity. Pertinent questions have been raised about the project itself and the background of the agreement between the Yemeni government and the Emirati company. There are also questions about what extent this project can free the telecom sector from the Houthi grip, and the ties between the project and the state-owned company ‘Aden Net’.

According to the Yemeni Prime Minister, the value of the telecom project is $700 million. The share of the Yemeni government in the project is 30%. The two parties reached an agreement regarding the project after negotiations that were conducted more than a year ago, according to the Communication Ministry.

In a statement, the ministry said: "We confirm that the negotiations with the investors in the UAE regarding the establishment of a telecom company began more than one year ago. The investment project is part of the Emirati efforts to support Yemen and its telecom sector in order to improve the level of the service and reduce the control of the Houthi group militias over the telecom sector as well as find new resources for it."

On Aden Net's ties to the project, the ministry said: "Different options were discussed, including partnership and not selling. This would develop and expand Aden Net's project to invest in it in light of the Yemeni Investment Law and other influential laws in the Yemen Republic. This also aims to build sophisticated telecom infrastructure by using the latest technologies and to basically use Yemeni human resources and the infrastructure in Aden and different governorates."

The ministry stressed that these steps will be achieved under the management and supervision of the Ministry of Telecommunication and Information Technology as well as other relevant ministries and governmental institutions.

In his press conference, PM Maeen Abdulmalik detailed some features of the project. He said that "negotiations about it weren't held in secret. All articles of the agreement were discussed by the Cabinet and submitted to the PLC." Abdulmalik criticized those opposing the project and added that the Yemeni government needs $ 3 billion to revive the telecom sector and end the Houthi domination over it.

Wagdi Al-Saadi, Media Advisor to the Minister of Communications, exclusively told ’South24 Center‘ that "the project aims at enhancing the partnership and investment between Yemen and the UAE, including in the telecom sector, in addition to encouraging the national private sector to pump investments in such projects".

He added: "The agreement includes the establishment of a joint company called 'Aden Telecom', in cooperation with the UAE, to fund and operate a telecom network that would provide mobile and internet services including the 2nd, 3rd, 4th and 5th generations. This move is a unique opportunity for the internationally recognized government and the Ministry of Communication to improve the worsening condition of the telecom sector and provide a developed infrastructure that uses the latest technologies in addition to supporting national human resources".

According to him, "The agreement wasn't just an instant outcome but was also a result of higher instructions by political leaders in Yemen and the UAE".

Al-Saadi pointed out that “all the measures taken by the Ministry of Communication before signing the agreement were backed by active Yemeni laws, including Law No. (38) of 1991, relating to the telecom sector and its amendments, Law No. (22) of 1997 regarding commercial companies and its amendments, and Law No. (15) of 2010 regarding investment and its amendments. We haven’t deviated from the regulations of the Ministry of Telecommunications and Information Technology and the active Yemeni laws”.

He added: "The agreement was submitted to the Cabinet for approval according to Article No. (137/d) of the Yemen Republic Constitution, and Articles (12/d), 26) of Law No. (3) of 2004. After that, the Cabinet should submit the agreement to PLC, the current highest authority in the country, to ratify it".

Al-Saadi indicated that "the Aden Net telecom venture that was established with generous Emirati support will be merged with the new project".

While searching for information about Emirati 'NX', ’South24 Center‘ found the website of a company called ’NX Digital Technology‘ based in Abu Dhabi that specializes in the field of information technology, networks, telecommunication, and digital security.

According to the website, ’NX‘ or ’NX Digital Technology‘ (NXDT), is an Emirati-owned company that was founded in 2015 and is based in Abu Dhabi. Its Executive Director is Dr. Abdulla Al Nuaimi. It describes itself as "one of the leading Artificial Intelligence, Cybersecurity & Telecom service providers in the Middle East”.

On its LinkedIn account, the company says that it "delivers a comprehensive portfolio of next-gen security services to mitigate everyday risks over the network, cloud, and mobile devices thereby safeguarding digital ecosystems and value chains across the region.” It describes itself as “a dynamic and innovative telecom services provider, committed to delivering seamless communication solutions to connect individuals and businesses. With a focus on cutting-edge technology and exceptional customer service, NX empowers its clients to stay connected and thrive in today's rapidly evolving digital landscape.” Moreover, the company works as a strategic security partner of institutions across the region and has globally prominent partners such as ’Microsoft‘, ’Huawei‘ and ’Dell’.

According to its website: the company was certified "ISO 9001:2015 Quality Management System", ISO 45001:2018 Occupational Health and Safety Management System, ISO 14001:2015 Environmental Management System, and ISO 27001: 2013 Information Security Management System".

In January 2023, ’NX Digital Technology‘ participated in the international trade exhibition ’Intersec Expo 2023‘ in Dubai. The expo is “the world's leading trade fair for safety, security and fire protection” that was held at the Dubai World Trade Centre, according to a report by Emirati news agency ’Wam‘. Several other major companies too participated in the expo. 

Currently, six telecom and internet companies operate in the Yemeni market: (Sabafon, U [formerly MTN], Y, Yemen Mobile, TeleYemen, and Aden Net. Except for ’Aden Net‘, the rest of the telecom companies are controlled by the Houthi militia through which they earn millions of dollars. This includes the revenue earmarked for the governance of the governorates that rely overwhelmingly on these telecom firms.

A previous report by 'South24 Center' in November 2021 detailed the Houthi measures to control these companies and some statistics of the huge revenues gained by these militias. For example, some companies pay the Houthis fees to temporarily extend their operating licenses until they can negotiate for getting new ones, such as ’MTN Yemen‘, which paid $36.4 million to extend its expired license for 28 months.

In addition to the license fees, the Houthis collect annual fees from the telecom companies under the pretext of “regulating the telecommunications sector”. According to the Houthi-affiliated ’Central Statistical Organization’, in its annual Statistical Book 2017, the communication and information technology sector represented about 7% of the real Gross Domestic Product. 

A Yemeni economic expert told ’South24 Center’ in the aforementioned report that “the telecom sector revenues today exceed those of the oil sector". He added: "There are no official statistics about the budget of this sector in particular because it is divided between powerful figures in Sanaa and the state; but billions of dollars are poured into the Houthi coffers”.

The Houthis’ privileges are not limited to the huge revenues but extend to the security and intelligence fields too. Experts have drawn a link between the telecom sector, which is managed from Sanaa, and the Houthi missile attacks against the Southern military leaders over the past years. This is in addition to the campaigns launched in North Yemen against journalists and opponents.

Furthermore, the Houthis have exploited the telecom companies for their escalated media propaganda, besides blocking hundreds of local, Arab, and international websites and satellite channels that oppose or criticize them. The new telecom project in Aden would deliver the biggest blow to the Houthi-controlled sector. This comes after ’Aden Net’ dealt a blow to the Houthis in areas under government control. However, Aden Net had limited impact and outcome due to the spread of corruption and the fact that only a small segment of society in Aden and other cities received its services.

Yemeni engineer Fahmi Al-Bahith believes that the telecommunications sector in Yemen is beset with many risks regardless of the identity of the company and its backers. He told 'South24 Center' that all telecom companies retain people's sensitive data, phone calls, and messages, adding that "they have to adhere to moral and legal principles regardless of the company, nationality or any other factor".

He said: "We hoped that the parliament would discuss the future of 'Aden Net', the reasons behind its failure and the fate of its investments, as well as the recommendations to revive it as being the supposed internet gateway. Unfortunately, this hasn't been achieved."

Economic and political expert Majed Al-Daare describes the opposing position adopted by the Yemeni Parliament and other parties against the telecom project as being part of their "political agenda and conflict of interest". He told 'South24 Center‘ “that former and current officials of the internationally-recognized government, parties, influential figures, and Yemeni financiers support the continuance of the Houthi’s absolute dominance on the telecom sector".

He explained: "They are safe from the Houthi evil and the danger of being assassinated by tapping of phone calls which is confined to Southern leaders and officials. As Southerners, we have the right to demand that the telecom and internet be freed from the Houthi domination that kills us. The legitimacy of the parliament has expired. There is no legitimacy for any of its decisions issued via WhatsApp or Zoom."

Despite the opposition to the telecom project, at least four PLC Members, including Aidrous Al-Zubaidi, Abdulrahman Al-Mahrami, Tariq Saleh, and Faraj Al-Bahsani, have endorsed it, in addition to the indecisive stances adopted by PLC Chairman Rashad Al-Alimi and its Members Abdullah Al-Alimi and Sultan Al-Arada.

In the absence of the likelihood of any regional dimensions cropping up against the project, work on it will likely start soon, according to experts.