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Mobile Market Moves ZTE

Phil Harvey
8/19/2009

Mobile equipment sales help ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) continue to defy gravity as the networking equipment vendor reported revenues of 27.7 billion Yuan Renminbi ($4.05 billion) for the first half of 2009. ZTE's net profit for the period was RMB780 million ($114 million), an increase of about 40 percent from the year-ago period. (See ZTE Reports H1.)

What's growing?

Well, anything mobile. In China, 3G networks are still being built, and ZTE is certainly benefiting from the continued construction. The company's China-based revenues were RMB14.95 billion ($2.19 billion), and last year nearly 40 percent of ZTE's revenues came from Chinese carriers. (See ZTE Ramps 2008 Revenues.)

Mobile capex appetite
In March, a Light Reading Insider report noted that, in China, mobile accounts for around 74 percent of all capex investment. On a global level, mobile is expected to account for nearly 60 percent of all capex by 2013.

Pyramid Research notes that mobile operators will spend somewhere around $41 billion to develop China's 3G market in the next two years. China's mobile industry added 71.2 million mobile subs in 2008 and that's expected to grow 12 percent this year, according to analyst Daniel Yu, writing in Pyramid's June 2009 "Country Intelligence Report" on China.

Even outside of China, ZTE is seeing mobile growth as a boost to its business. (See ZTE Readies Fresh Assault on Europe, US.) So far this year, ZTE says it has benefited from 2G network buildouts in some countries, and mobile network expansion in countries such as Indonesia, Vietnam, and Turkey.

ZTE is also reporting record shipments for its CDMA base stations. The company shipped 75,000 units during the first half of 2009, more than it shipped all of last year.

— Phil Harvey, Editor-in-Chief, Light Reading

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