ZTE Outlines Global Ambitions

LONDON -- Chinese vendor ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) is accelerating its march into the network infrastructure and handset markets outside its domestic market, and has set itself some ambitious goals for the coming three to five years.

Speaking at a media event here today, Jim Jinghui, managing director of ZTE (UK) Ltd., said that within the next three years, the company intends to be among the top three vendors in both the wireless and wireline equipment markets. All very well, but Jinghui didn't provide any insight into how the company intends to reach those lofty goals beyond what it has said before. (See ZTE Unveils New 'Western' Division.)

ZTE says it overtook Nortel Networks Ltd. and Motorola Inc. (NYSE: MOT) in 2009 to become the world'’s fifth-largest telecom infrastructure vendor, with carrier network infrastructure revenues of US$5.91 billion giving it a 7.5 percent share of the global market. (See ZTE Grows 36% in 2009.)

According to various industry analyst firms, ZTE now commands 19 percent of the global FTTX market (Idate ), is the fourth-largest supplier of mobile base stations (Infonetics Research Inc. ), and the fifth-largest optical equipment vendor (Ovum Ltd. ).

The company's aspirations don't stop at the infrastructure market, though. ZTE aims to be among the top five mobile device suppliers within the next three years, and break into the top three within five years. That means ZTE will have to overtake the likes of LG Electronics Inc. (London: LGLD; Korea: 6657.KS) , Motorola Inc. (NYSE: MOT), and Sony Ericsson Mobile Communications in terms of volume shipments -- a tall order indeed.

That's not its only tough task. The vendor clearly has its work cut out to boost its revenues outside China. Europe and the US still only accounted for 16.3 percent of global revenues in 2009, or a third of total international sales, while China accounts for just more than half of total revenues, at 50.4 percent.

Jinghui said the company now has relationships with 23 of the world's top 30 operators, and 500 operators in 140 countries. But it's clear that handsets and mobile broadband dongles, rather than network gear, will be the initial growth areas for the company in global markets.

In the UK market, for example, ZTE has made some headway with device sales, and expects to sell up to 3 million handsets and mobile broadband dongles in 2010, double the volume sold in the UK in 2009.

ZTE has yet to sign any network deals in the UK, although it's expecting to sign (mainly fixed) network contracts worth a total of $10 million in 2010, increasing to $25 million in 2011. Jinghui said he expects ZTE to start securing wireless network deals in the UK in two to three years' time, with the introduction of Long Term Evolution (LTE) providing the impetus.

"HSPA could last a long time... five years or more," said Jinghui, though he added that there might be some early adopter opportunities with LTE.

Jinghui admitted that ZTE still sees handsets as the strongest growth area in Europe in the near future. (See ZTE Aims for Euro Smartphones.)

Currently, the vendor is the sixth- largest handset manufacturer globally, shipping more than 60 million mobile terminals in 2009, including 20 million data cards.

In the UK, the company is targeting 6-8 percent of the handset market in 2010, a target that will be helped by the launch of around eight new handsets this year, two of which will be based on the Android platform.

Wu Sa, director of mobile device operations for ZTE (UK) Ltd., said the focus will be on the UK carrier handset channel this year, which ZTE estimates to be around 17 million units in total. But he conceded that the vendor will have to increasingly address the retail market if it is to reach its global market share goals. Indeed, ZTE will be stepping up its own-branding activities in Europe in 2010, with handsets such as the ZTE Skype phone already being marketed in the UK.

— Anne Morris, freelance editor, special to Light Reading

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