ZTE's US Push Pays Off

ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763)'s half-year financials were hurt by India's import ban on Chinese tech, but its focus on the US market is starting to pay off big. (See ZTE Reports Interim Results.)

The Chinese vendor reported operating revenues of US$4.52 billion, a 10.89 percent increase year-on-year. ZTE said 18 percent of its total revenue flow for the first half of the year came from the European and US markets, representing a year-on-year jump of 45 percent. First-half revenues for those regions set a new high water mark, the company noted in its earnings release.

Net profits for the company grew 12 percent from the previous year to $129.14 million.

ZTE said it extended its position in the high-end European and US markets by "consistently meeting customer needs in terms of cost reduction, low carbon emission and environmental issues" and as a result of its "experience dealing with multi-national carriers and advanced Software Defined Radio (SDR) product solutions."

In 2009 more than 80 percent of the company's revenue came from Asia and Africa. Throughout 2009, however, ZTE had invested more than $1.5 billion in hardware and software for the US. Troubles in its home territories have also caused it to look abroad.

No Chinese gear has been cleared for import into India since February of this year due to alleged security concerns, something ZTE referred to as "an incident relating to the safety inspection of communications equipment in India."

Both Huawei Technologies Co. Ltd. and ZTE have been hit hard by the ban, which is expected to be lifted soon. ZTE's sales in Asia, with the exception of home territory China, fell 19 percent, to $770 million, in the first half of 2010. (See India Clears Way for Chinese Imports, No Respite for Chinese Vendors, and BSNL Blocks Huawei, ZTE Bids.)

Verizon phone breakthough
Even as it attempts to rebuild its presence in India, ZTE's push into the US -- which comes after many years of struggling to make it against larger players like Ericsson AB (Nasdaq: ERIC) and Alcatel-Lucent (NYSE: ALU) -- is only just beginning.

Today it announced it will bring its first handset, an entry-level phone called the "Salute," to a Tier 1 US carrier: Verizon Wireless .

It already has phones on a smaller carrier, MetroPCS Inc. (NYSE: PCS), but Verizon is its first big-name US wireless partner. The vendor is also in talks with T-Mobile US Inc. and Sprint Corp. (NYSE: S) to bring more phones to US. Its first smartphone will hit the States in 2011. (See Verizon Gets its First ZTE Phone.)

On the 4G front, ZTE touted its global WiMax networks and noted that it has seven commercial Long Term Evolution (LTE) networks and nearly 50 trial networks globally, which it says have spurred carrier confidence in Europe and the US.

ZTE expects a boon as network upgrades and broadband conversions take off. (See ZTE Deploys WiMax in Spain and India's 3G Players Ready for Swift Launch.)

"Looking to the second half of the year, carriers will focus on the development of mobile broadband, which will require ongoing broadband construction," according to the news release. "Carriers will continue with their testing and deployment of high-end technologies, including 4G technology. Cloud Computing is also expected to be more adopted by carriers."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

ieeefellow 12/5/2012 | 4:26:03 PM
re: ZTE's US Push Pays Off

It seems that ZTE's strategy is to sell the phone to carriers, in contrast to the Huawei's approach, which desires more to the infrastructure side stuff.

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