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ZTE Rides China 4G Rollout to Higher Profits

Robert Clark
News Analysis
Robert Clark
8/20/2014

China's hefty 4G rollout has come to the rescue of ZTE's interim result, propelling it to a healthy 1.28 billon yuan (US$180 million) profit despite a drop in handset sales.

Total revenue for the six months to June 30 was flat at 37.697 billion yuan ($6.14 billion), but carrier gear sales were up nearly 15% to 21.8 billion yuan.

The China 4G sales also hoisted the margin in the carrier unit by 3.9 points to 39%. In China, the margin increased nearly eight points.

ZTE said in a statement that the "substantial increment" in gross margin and profit was attributable to improved management of contract profitability and the greater sales of 4G kit in China.

By contrast, mobile phone revenue was off 16% year-on-year, which the company said was a result of lower 3G device sales in the China market.

ZTE also predicted earnings for the first nine months would be between 1.7 billion to 1.9 billion yuan in the first nine months, up 208.2% to 244.5% from a year ago.

— Robert Clark, contributing editor, special to Light Reading

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