ZTE Bags Another $10B in Credit

Need to borrow some cash to build a network? Credit crunch cramping your game plan? Then expect to hear from ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) very soon.

The Chinese vendor had already secured a $15 billion line of credit from China Development Bank in March this year to help fund its international expansion efforts and provide a credit line to operators looking to finance their network rollouts. (See ZTE Secures $15B, Highlights R&D.)

Now ZTE has "entered into a strategic partnership" with the Export-Import Bank of China (China Exim Bank), which is providing the vendor with a $10 billion credit line that can help fund ZTE's overseas development and provide funding to operators struggling to fund their network rollout requirements. (See ZTE Secures More Credit.)

ZTE notes that carriers worldwide are "under enormous pressure to develop next-generation telecom technologies, such as 3G to meet market demands," and that, during the "current global financial crisis, a majority of mainstream financing agencies based in Europe and the U.S. are trying to find ways to address issues such as inadequate liquidity and credit crunch."

China Exim Bank, on the other hand, "has an advantage by possessing a healthy balance sheet as well as strong financing and credit ability they see positive future prospects for the global telecom industry." [sic]

The news that ZTE, which is aiming to boost its presence in Europe and North America following a year of stellar growth, has $25 billion in credit lines behind it will heap even greater pressure on the traditional infrastructure vendors, some of which expect the global infrastructure market to shrink during 2009 by anything up to 12 percent. (See ZTE Ramps 2008 Revenues, ZTE Unveils New 'Western' Division, Nokia Siemens Braced for Tough 2009, and Verwaayen Unveils AlcaLu's New Plan .)

ZTE and its fellow Chinese telecom equipment supplier, Huawei Technologies Co. Ltd. , though, expect to defy the market and increase their revenues this year. (See Huawei, ZTE Predict 2009 Growth.)

— Ray Le Maistre, International News Editor, Light Reading