& cplSiteName &

ZTE Gains Ground on Ericsson, Nokia in H1

Iain Morris

Chinese equipment vendor ZTE has made further gains on larger Western rivals Ericsson and Nokia, reporting growth in sales and profits in the first half of the year thanks largely to the expansion of 4G networks in China.

Operating revenues rose by 4.1% in the first six months, to 47.8 billion Chinese yuan ($7.2 billion), compared with the year-earlier period, while net profit was up 9.3%, to around RMB1.8 billion ($270 million).

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) is dwarfed by domestic rival Huawei Technologies Co. Ltd. , which last year overtook Sweden's Ericsson AB (Nasdaq: ERIC) to become the world's largest supplier to communications service providers (CSPs), but it has also managed to report growth while its bigger Western competitors have been struggling. (See Huawei: New King of the CSP Market.)

ZTE's rate of revenue growth pales in comparison with the 40% year-on-year increase that Huawei has already reported for the first six months, but it matches up favorably with a 7% revenue decline at Ericsson and one of 10% at Nokia Corp. (NYSE: NOK), in local currency units. (See Huawei Reports 40% H1 Sales Growth But Margins Suffer and Ericsson 'Doubles' Savings Goal as Sales Slump.)

Unlike Ericsson and Nokia, which are heavily focused on the sale of networks and services to CSPs, the Chinese companies maintain large and growing devices businesses, making direct comparisons with their European counterparts awkward.

Even so, their CSP divisions have been driving much of their growth.

ZTE reported a 5.1% year-on-year increase in sales at its "carriers' networks" division, to RMB28.7 billion ($4.3 billion). Revenues from the comparatively small "government and corporate business" rose 2.5%, to RMB4.6 billion ($690 million), while those from the devices business were up 2.6%, to RMB14.4 billion ($2.2 billion).

Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel
here on Light Reading.

Last year, Huawei trumpeted a 21% increase in sales to communications services providers, to about $36 billion.

Besides the ongoing rollout of 4G networks in China, ZTE attributed its growth to the rising take-up of cloud-computing and big data services, as well as interest in video and Internet of Things services.

Nevertheless, the company drew attention to "increasing pressure in operations" during the first half of 2016 due to a decline in traditional activities.

Hoping to better position itself for growth in future, ZTE today announced a new five-year strategy called M-ICT 2.0 based around the five key trends of "virtuality, openness, intelligence, cloudification and the Internet of Everything" -- handily contrived to produce the acronym VOICE.

For more on that strategy, see this report from the team at Telecoms.com.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Related Stories
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Featured Video
Upcoming Live Events
March 16-18, 2020, Embassy Suites, Denver, Colorado
April 20, 2020, Las Vegas Convention Center
May 18-20, 2020, Irving Convention Center, Dallas, TX
May 18, 2020, Hackberry Creek Country Club, Irving, Texas
September 15-16, 2020, The Westin Westminster, Denver
All Upcoming Live Events
Upcoming Webinars
Webinar Archive
Partner Perspectives - content from our sponsors
Challenges & Key Issues of Constructing 'MEC-Ready' 5G Bearer Networks for Carriers
By Dr. Song Jun, Senior Solution Architect, Huawei Datacom Product Line
Good Measures for 5G Service Assurance
By Tomer Ilan, Senior Director of Product Management, RADCOM
Automation Scores Against Operational Costs – The Business Benefits of Automation and Orchestration
By John Malzahn, Senior Manager, Service Provider Product Marketing, Cisco Systems
All Partner Perspectives