Telecom Companies are the Houthis’ Economic and Security Lungs in South Yemen

14-11-2021 at 4 PM Aden Time

Jacob Al-Sufyani (South24)

The 7-years ongoing war in Yemen has affected the Telecommunication sector in a way that gives the Houthis almost total control over it. This comes amid accusations that the internationally-recognized government intentionally kept the sector inside North Yemen fearing that any steps to move it to South could benefit their rivals. There are 6 operating telecommunication and internet companies in the Yemeni market (Sabafon, MTN, Y, Yemen Mobile, Tele Yemen and Aden Net). Apart from Aden Net, all of which are subjected to the Iran-backed Houthi militias who dominate Sana'a and most of North Yemen.

These companies produce huge financial resources for the group's treasury as well as giving the Houthis security and intelligence superiority by exploiting them in the espionage and surveillance activities against their foes.

Sabafon, Y and MTN, Which depend on the GPS operating system, are owned by the private sector, while Yemen Mobile (GDMA operating system) is divided between the government (the main owner) and the shareholders. However, Tele Yemen is a state-owned company.

Yemen Net, which is affiliated with the Public Telecommunication Corporation in Sana'a provides several services including Hosting websites, Dialup, ISDN, ADSL, Data Communication and others. ⁽¹⁾.

The Houthis partially controlled the revenues of these companies after invading the Yemeni capital in late 2014 before they have fully dominated them in the wake of killing the former Yemeni President, Ali Abdullah Saleh by the group's militia on December 4th 2017, and kidnapping the Communication Minister, loyal to him, Julidan Mahmoud Julidan, substituting him with one of their affiliates.

Since then, The Houthi hegemony over the six companies has continued without any serious action from the internationally-recognized Yemeni. Government to grab those immense resources and assets.

The governmental position can be classified as part of a multi-level droopy attitude towards the Houthis. This is probably attributed to the keenness of Northern parties to keep those companies away from Aden and South Yemen even if this allows the Northern religious group to hold control over them.

In November 2019, data, issued by the Yemeni Communication Ministry, showed that the number of Mobile phone User in the country reached 18.57 million.

Companies:

Yemen Mobile

Founded in 2004 as a fully governmental company. In mid 2006, it was the beginning of measures to transform it to a shareholding company by offering its shares to the public. In February 2007 it was declared as a shareholding company. ⁽²⁾

The government, represented by the Public Telecommunication Corporation, owns 59.37% of the company’s shares, while 17.09% are owned by funds related to Pension, Social Security, Juvenile and Youth and the Postal Authority, in addition to 23.54% owned by citizens, private companies and employees.

Yemen Mobile leads the Mobile sector with 7.4 million users, according to data issued by the Yemeni Ministry of Communication. The company is the most powerful inside the Yemeni market.

In January 2018. The Houthi Communication Ministry in Sana’a, which has been entrusted to Mosfer Al-Nomeir, made big changes in Yemen Mobile’s Board of Directors includIng the appointment of Essam Al-Hamali as the Chairman, and each of Taha Zabara, Wafaa Abdulkader, Abdulkarin Al-Onsy and Amin Al-Houthi as Members. ⁽³⁾

Moreover, the group appointed the Houthi leader Mohammed Sharaf as a financial official in the company, and the leader Abdulmalik Al-Mutawakkil as the Marketing Manager. According to Media outlets, Al-Hamli, Sharaf Al-Din and Al-Mutawakkil prepared a list that included dozens of junior officials in the company to be dismissed, in spite of their efficiency. and replaced by Houthi employees.

These changes, according to experts, accomplished the group’s takeover of the whole capabilities and resources of the company that is being described as “a hen which lays golden eggs” for the Houthis.

Sabafon

It is a Yemeni telecommunication company, and the first GSM provider in Yemen as it began in 2001. The Islah Party leader, Hamid Al-Ahmar owns 60% of its shares, and the Bahraini company “ Batelco” has 26.9% in addition to “Iran for Foreign Investment”. ⁽⁴⁾

Along with Yemen Mobile, Sabafon leads the Mobile Phone services market with about 6 million users.

Like other private companies, the Houthis controlled Sabafon after entering Sana’a. In August 2019, the company was divided into two parts after the group imposed Houthi-affiliated managers.

A statement, issued by the dissident part of the main company in Sana’a accused the Houthis of breaking into the headquarter, looting its assets, changing the company’s guards, making illegal appointments , as well as forging some formal documents and relevant seals.

Days later, the dissident branch announced moving to Aden, but communication experts confirmed that the company’s de-facto authority and the services are still in the Houthi hands.

On the other hand, Wagdy Al-Saadi, Director of the Public Relations Department at the Yemeni Ministry of Communications, told “South24” that Sabafon is now working in the liberated areas independently from all the company’s components in the Houthis’ areas of control.

MTN

Part of this Mobile network group is a multinational communication company which was founded in South Africa in 1994. The company provide the phone and mobile communication services in several African and Middle eastern nations. ⁽⁵⁾

The international group owns 83% of the Yemeni branch, while Yemeni businessmen contributed in the remaining percentage.

With nearly 5 million users, MTN holds the third position after Yemen Mobile and Sabafon of the whole number of Mobile users in Yemen.

To pave the way for looting its balances after imposing huge taxes and royalties on it since the Houthi control of Sana’a, the Tax Elementary Court in Sanaa ruled of seizing MTN’S assets in all banks and currency-exchange companies. ⁽⁶⁾

The court said that the rule was based upon the request of the Tax Authority.

Recently, communication experts revealed the Houthi attempts to fully seize the company by buying it.

Eng, Mohammed Al-Mohaymid said that the Houthis put the last frills for the final negotiations to buy the Yemeni branch of MTN, few weeks after the company paid 26 million dollars to the group as fees to renew the 2020-2021 operating license across the country including the liberated areas. ⁽⁷⁾

Al-Mohaymid indicated that the Houthi-affiliated “Investment Holding Company” will buy the Yemeni branch of MTN for 150 million dollars although its market value is about one billion dollars.

In a press conference held in August 2010, Rob Shuter, CEO of MTC announced the company’s decision to leave the Middle East and to bigin withdrawing from three states, Syria, Afghanistan and Yemen within the next 3 to 5 years.

Tele Yemen

The international Yemeni communication company (Tele Yemen) is affiliated with the Public Telecommunication Corporation which is fully subjected to the Houthi control. ⁽⁸⁾

The company provides direct international dialing service through the fixed phone, Moreover; it is the only provider of international calls for all Mobile networks in Yemen.

Yemen Net

It is affiliated with the Public Telecommunication Corporation to provide Internet in Yemen. It was established in 2001 and specialized in managing the internet services and sending data across the country as well as providing services available at the Internet providers in the world. ⁽⁹⁾

The Houthis took over “Yemen Net” by their control of the Public Telecommunication Corporation. They made a big increase in the internet fees as well as blocking websites they deem as being hostile to them (10)

Y Telecom

HiTS-Unitel (known by its commercial name “Y Telecom”) provides Mobile phone service through the global system “GSM”.

It is one of the private companies owned by Kuwaiti and Saudi investment companies and private sector investors in Yemen, the UAE and Syria. ⁽¹¹⁾

Like other telecommunication companies, the Houthis imposed heavy taxes on it. The Commercial Court in Sana’a declared the company’s bankruptcy in March 2020, to be sold after that to Ahmed Al-Issa, the businessman who is close to President Hadi and to the latter’s son, Jalal.

However, months after the same year, the Houthis in Sana’a announced resuming work in the company. They considered that the bankruptcy declaration was a “temporary accident” resulting from “invasion and besieginging different investment and service companies which operate in various Yemeni economic sectors”. ⁽¹²⁾

Economic lungs

From an economic perspective, the communication sector is one of the most important sources of revenue for the state, especially the hard currency. Before the conflict, it held the second position among sources of revenue after the oil and gas sector. The Mobile service providers paid different fees in return for establishing public wireless mobile networks and providing their services, in addition to operating and managing them.

There are fees imposed for obtaining an operating license and which is paid once for a one year- license or more. ⁽¹³⁾

Some companies paid the Houthis fees to temporarily extend their operating licenses until they can negotiate for getting new one such as “MTN Yemen” which paid 36.4 million dollars to extend its expired license for 29 months which in turn expired in December 2017. ⁽¹⁴⁾

In addition to the license fees, the Houthis collect from the public wireless communication companies annual fees under pretext of “regulating the communication sector”. ⁽¹⁵⁾

According to the Houthi-affiliated "Central Statistical Organization, in its the annual Statistical Book 2017, the communication and information technology sector represented about 7% of the real Gross Domestic Product. ⁽¹⁶⁾

This huge percentage shows the economic importance of the communication sector for the Houthis, and how it acts as a breathe for them thanks to the resources they collects from Southern governorates, and the northern areas that have not been controlled yet by the Houthis.

The annual revenues produced by the telecommunication sector before controlled by the Houthis are estimated to be 159 million dollars which possibly witnessed a large increase over the past years.

Experts confirm that the financial revenues of the sector which pour into the Houthis coffers exceed this percentage by much far, as the group accomplished its control over the public and private sectors in addition to imposing heavy fees and taxes on the sales of the recharge vouchers and cards.

As for the destination of the communication sector’s revenues, Wagdy Al-Saadi, said: “the biggest percentage of them go to the Houthi treasury, and some of them go to the legitimate government”.

He added: “This represents the ratio and proportion related to the population density which is bigger in the areas controlled by the Houthis”.

For his part, the economic expert Majed Al-Dairi told “South24” that “the communication sector revenues today exceed those of the oil sector’

He added: “There are no official statistics about the balance of this sector in particular because it was divided between powerful figures in Sana’a and the state but billions of dollars poured into the Houthi coffers”.

During a panel discussion held in Marib in February 2020, the economic expert Mohammed Al-Mohaymid said that the Houthis collected from the most three prominent communication companies(Yemen Mobile, Sabafon and MTN) 305.316 billion Yemeni rials over 5 years under the “taxes and zakat” clause.

Sources in the Public Telecommunication Corporation, which is subjected to the Houthis, told the Emirati newspaper “Al-Bayan” that the taxes revenues collected by the Houthis from the communication sector are about 80 billion rial Yemeni annually. ⁽¹⁷⁾

The sources pointed out that the group’s revenues from the telecommunication sector reached the level of 280 million dollars in 2018(140 billion rials) which are more than the prior years due to the Houthi new imposed fees (some of which are not publicly declared).

The sources referred to the Houthi attempts to restore communication sector revenues frozen abroad which are estimated to be 300 million dollars.

The Houthis also use the SMS service in the mobile phone networks to demand donations from the citizens for the so called “war effort”, and for supporting “the Prophet Birthday” celebrations held annually by the group.

Noteworthy, the communication companies impose over 200% fees increase on Southern governorates under the pretext of the exchange rate difference between the Yemeni in Sanaa and Aden which reached 120.

Security and intelligence superiority

In August 2020, local Yemeni sources told the Saudi Channel “Al Arabia” that the Houthis “inserted eavesdropping devices in the communication companies under their control to spy on legitimacy leaders and the group’s opponents as well as doubtful loyalists”. ⁽¹⁸⁾

The sources affirmed that the Houthis put more than 3000 persons (civilians and military personnel) in the legitimate government “under surveillance and eavesdropping”. They connected the public communication system with the security and intelligence agency affiliated with the militias on orders from Abdulmalik Alhouthi. Moreover, they added new eavesdropping systems to the network, which is operated under the supervision of a Lebanese engineer who is loyal to Hezbollah.

The sources added that the Houthis tend to cut off and reconnect communication in some of the confrontation areas in Marib and Al-Jawf according to their requirements in the battle ground.

Indeed, according to experts and observers, the Houthis often precede their military attacks by cutting off communication in the target area. One prominent example for this is what happened in Hujur areas in Jawf, which being occupied by the group in March 2019 after violent siege and battles with the tribes concurrently with cutting of the communication services in it. ⁽¹⁹⁾

Observers attributed this Houthi strategy to the group’s desire to make a total blackout about what happens on the grounds, including violations and acts of violence against civilians, as well as the attempt to obstruct the communication of people and tribes who defend their territories.

Wagdy Al-Saadi, the Yemeni Ministry of Communications official admits that “there are big security risks known to all represented in spying, surveillance and eavesdropping against many users. This harms several governmental leaders and journalists chased by the Houthis''.

Al-Saadi indicated that they, in the Yemeni government, informed the international relevant parties about the Houthi activities, He added: “we provided them with names, and demanded imposing sanction but unfortunately nothing happened”.

He believes that this international attitude “has encouraged the Houthi militias and provided them with an international cover to continue their criminal activities”.

expert Majed Al-Dairi noted that the Houthis, in addition to their huge economic gains from the communication sector “strengthen their security grip as well as espionage and intelligence surveillance activities against their foes and opponents through this sector”.

The Iran-backed religious group also carried out many attacks via drones and ballistic missiles, targeting prominent military leaders in South Yemen and military gatherings of Southern forces.

In February 2017, Ahmed Saif Al-Yafei, the then Chief of Staff of the Yemeni Army was killed by a Houthi missile in the city of Al-Mocha in the Western Coast.

In January 2019, the Houthis attacked the strategic Military Base “Al-Anad” in the governorate of Lahij in South Yemen using a drone causing some casualties including Chief of Staff, Saleh Al-Zindani and Chief of General Intelligence Mohammed Saleh Tammah as well as dozens of wounded.

The prominent leader in the Southern Forces, Munir Al Yafei Abu Al Yamama was also killed by a missile attack which caused dozens of deaths and injuries among the soldiers in the Al-Jalaa camp in Aden in August 2019.

This pattern of Houthi attacks was repeated many times, targeting Southern camps in Al-Dhalea, Lahj and Abyan, in addition to the city of Marib, which includes the Ministry of Defense and the headquarters of the Third Military Region.

Experts point out to the Houthi main reliance upon their affiliated telecommunication companies which provide services in South Yemen, to make activities such as following up, surveillance and detecting locations.

In November, the international company “Record Future”, which is specialized in the cyber threat intelligence, revealed that the “Houthis use the internet network for their interest to spy on and monitor its users in addition to block their rival websites”. ⁽²⁰⁾

In its 2019 report, “Access Now”, which defends digital civil rights across the world, said that Yemen had "the biggest share of blocking internet websites in the Middle East." ⁽²¹⁾

The organization pointed to reports from several trusted sources revealing that the real number of the internet blockage operations in Yemen is much more than the number documented.

In late November 2020, the Houthis fully blocked dozens of websites of local, Arab and international channels, including Al-Hurra, Al-Arabia, Al-Hadath and Al-Jazeera.

Additionally, the group blocked most of the news websites it deemed as “hostile” and the official Saba’ Agency which has been divided between the Houthis and the Yemeni government.

The Yemeni government’s position

In spite of the huge Houthi gains from the communication sector and the infinite security and military risks in case this sector remains in the hands of the group, the Yemeni government, according to experts and observers, has not made any actual measures to regain it. ⁽²²⁾

Experts indicated that the matter just needs a political governmental decision, calling the relevant international authorities to pull out the “codes” from the Houthis, and reactivate them later after moving the Public Telecommunication Corporation and the service providers companies to the government’s areas of control.

They affirm that there is no convincing reason which prevents the internationally-recognized governments from snatching this economic and security important sector from the Houthi grip especially that all legal, administrative and technical aspects are on the governmental side.

It seems that the reason behind the weak governmental positions is that the wings which control the government’s decision making, mainly the Islamic Islah Party prefer keeping the communication sector in the Houthi hands rather than Aden.

It is likely that those parties which enjoy widespread political, administrative and military influence in the Yemeni “Legitimacy” fear moving the communication companies’ headquarters to Aden, due to bigger concerns about a possible independence by South Yemen over this sector to practically enhance its all-out separation approach.

In this regard, Majed Al-Dairi said that the “Legitimacy” refused all projects and plans presented to it to separate the communication network including “a very easy plan by changing the main path of the internet and communication maritime cable to Ghaydah-Al-Mukalla-Aden instead of Ghaydah-Marib-Sanaa”.

He added: “the former Communication Minister Lotfi Bashrif has been engaged in relationships and personal interests in Sana’a, so he fears the repercussions of such a decision which he rejected in spite of his nominal step of moving the administration of Tele Yemen, the main communication provider in the country, to Aden.

He went on saying: “Bashrif failed to pay the salaries of the employees in Aden due to his manipulation, and his rejection of any governmental moves to separate the telecommunication sector from Sana’a with which the interests of “ Al- Ahmar and the top governmental legitimate leaders(the Internationally-recognized government), influential traders, the banks and others are connected”.

Al-Dairi affirmed that “everyone fears the STC’s control of the communication sector and prefers the continuous Houthis grip over it instead of their Southern partner”.

Wagdy Al-Saadi denied these allegations adding that “the ministry from the first moment of the government’s formation called for investment and true partnership with the entire private sector with no exception. Moreover, the Minister, Dr. Najib Al-Auj is keen to engage the private sector in the investment”.

Al-Saadi attributed the Houthi continuous control over the communication sector to the “current hard situation in the liberated areas ,the lack of resources and the absence of any support which could help us, as ministry, to make a qualitative move”.

“On the other hand, the ministry made a lot of measures which helped to move some sectors, and the work continues to complete the rest. ” he added, indicating that the slowness of work is due to the aforementioned circumstances.

In September 2018, the former Communication Minister Lotfi Bashrif inaugurated the communication private company “Aden Net” which provides the 4G service to a limited section of Aden's population.

In spite of being independent from the communication sector, controlled by the Houthis, Aden Net doesn’t represent- according to experts- a real number in the communication market in South as the companies, run from Sana’a, dominate most of it.

Furthermore, Aden Net faces accusations of corruption and the increase of its users’ complaints about the increasing failure of the service due to the growing number of users while the company stands at the same level without any development.

Over the last two months, the advertising company “Be Fast” kicked off a propaganda campaign to promote for the cellular company “Y Telecom”, of which 65% owned by the businessman Ahmed Al-Issa, who is close to the Yemeni Presidency, while the remaining shares are divided among figures close to President Hadi. It is believed that his son Jalal is one of them. ⁽²³⁾

According to these advertisements, the company is supposed to provide the 4th Generation “4G” service in the governorates of Hadramout, Marib and Aden as a first stage.

“Y” company in Sana’a, which is controlled by the Houthis, accused the prospective company of stealing its name, and of attempting to clone it ⁽²⁴⁾ while journalistic sources affirmed the independence of “Y Telecom” regarding its systems and SIM numbers. ⁽²⁵⁾

As for the ownership of “Y Telecom”, Al-Saadi confirmed that it is related to some local capitalists and Arab investors and accordingly belongs to the private sector.

In March 2021, governmental media outlets said that the Communication Minister in the Yemeni Parity government, Najib Al-Auj, discussed with the Arab Satellite Communications Organization “ArabSat” the ways to “complete the technical arrangements related to providing the internet and communication services through Satellite”. ⁽²⁶⁾

“The Communication Ministry began a lot of changes which would make tangible changes soon by establishing an integrated communications system managed from the liberated areas” Al-Saadi said.

Thus far, it doesn’t look like we will see many changes regarding this sector. This would mean a continuous Houthi draining of the sector’s huge resources in conjunction with their attacks on the city of Marib, the last bastion of the Yemeni government in North amid the rise of security and military challenges in South.

Currently, the STC, which runs Aden and most Southern governorates and the prominent partner in the government, is still absent from putting competitive investment strategies in this field, or changing the current reality, especially in light of the increase of the assassination and specific attacks against its members over the past years.

Jacob Al-Sufyani
Fellow and journalist editor with South24 Center

Photo: The Independent

References:

1- Wikipedia

2- Wikipedia

3- Almawqeapost, “The Houthis tighten their grip on Yemen Mobile, while the Legitimate government let down the company’s leaders”, document.

4- Sana’a Center for Studies, The Conflict Impact on the Yemeni telecommunication sector”

5-Wikipedia

6- Almawqeapost, “The Houthis issued a rule to seize the MTN Yemen’s assets. A document”

7- Alasimahonline, “the Houthis Attempt to Take over the MTN’S Yemen branch”

8- Wikipedia

9- Wikipedia