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ZTE Secures $15B, Highlights R&D

Chinese vendor secures $15B credit line and details R&D focus areas, including LTE, SDR, PON, optical transport, IMS, and OSS

March 20, 2009

5 Min Read
ZTE Secures $15B, Highlights R&D

A day after announcing record annual revenues and a significant hike in net profits, ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) says it has secured a $15 billion line of credit from China Development Bank. (See ZTE Ramps 2008 Revenues.)

The Chinese vendor states that, under the agreement, "both parties will closely work together to establish an investment and financing platform, including expansion to overseas markets. According to a 5-year cooperation framework agreement, China Development Bank will provide ZTE a US$15 billion credit line, including ZTE's overseas project financing and ZTE's credit limits."

ZTE notes that the vendor community is under "enormous pressure to develop next-generation telecom technologies, such as 3G," but that "the majority of mainstream financing agencies based in Europe and the U.S. are trying to find ways to address issues such as inadequate liquidity and credit crunch."

China Development Bank, though, is loaded: It claims assets totaling nearly 2.9 trillion Yuan Renminbi ($423 billion).

ZTE believes its new credit line will help it expand internationally and fund its R&D programs, all of which will improve its potential to win business from, and work closely with, global carriers.

Might the available funds also be used to provide vendor financing facilities for operators with squeezed credit lines? Or maybe even fund acquisitions? ZTE had not responded to these questions as this article was published, but we're hopeful of getting an answer soon.

As for ZTE's R&D activities, the vendor's 2008 report, issued Thursday, provided some clues as to where some of the funds from the monster credit line might be channeled.

ZTE noted in its documents filed with the Hong Kong stock exchange that it has a number of particular technology developments under way. These include:

  • LTE Advanced: ZTE says the work it is doing on LTE (Long-Term Evolution) and LTE-Advanced represents its "most important strategic work." The vendor, which hosted a 3rd Generation Partnership Project (3GPP) workshop on LTE-Advanced last year, says it has "set up a research team comprising experts from the WCDMA, TD-SCDMA, WiMAX and CDMA lines" along with next-generation network specialists to work on all aspects of LTE-based wireless broadband developments. (See 3GPP Studies LTE Are Advanced.)

    The vendor says it plans this year to "commit additional resources to enhance its technological strengths and industry influence in LTE/LTE-A, in a bid to lay a solid foundation for subsequent industrialisation and commercialisation."

  • Taking PON to the next level: In December 2008, ZTE unveiled what it calls "Next Gen PON equipment" -- a unified platform that supports EPON, GPON, and point-to-point fiber access. (See ZTE Touts Next Gen PON.)

    According to ZTE, it was the leading supplier of EPON equipment to China Telecom Corp. Ltd. (NYSE: CHA) and China Netcom, which is now called China Unicom Ltd. (NYSE: CHU) following last year's carrier asset shuffle, in 2008. (See China Begins $70B Carrier Revamp.)

    China Telecom is believed to have deployed equipment for 4 million EPON lines last year, while Netcom's plans are believed to have been much smaller at less than 100,000 lines built out.

    ZTE also says it delivered PON equipment to PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) in Hong Kong, Telecom Argentina (NYSE: TEO), and Telecom Italia (TIM) .

  • From IMS to ZIMS: ZTE says it has launched the IMS-based "multimedia network solution" it calls ZIMS. Honest. ZTE first talked about this two years ago. (See ZTE Launches ZIMS.)

    Built on the vendor's "core IMS system structure," ZTE has incorporated applications such as desktop videoconferencing and high-definition videoconferencing into ZIMS. "These services were well received by carriers," claims the vendor.

  • Next gen OSS: ZTE says it has completed the development of an integrated network management system that can manage transport networks, data networks, all types of cellular access (including GSM, CDMA, WCDMA and TD-SCDMA), and fault and performance management functions.

  • Building on SDR success: ZTE says its software-defined radio (SDR) products have been chosen by China Telecom for the advancement of its CDMA network, by China Mobile Ltd. (NYSE: CHL) for its TD-SCDMA developments, and by Hong Kong CSL Ltd. . Now it's looking to advance and build further on its platform. (See MWC 2009: SDR Coup for ZTE and Multi-Standard Radio Systems.)

  • Optical transport advances: ZTE says its "next-generation optical network transmission equipment industrialisation project" is going well, and will result in new products in 2009, though there were no specific technical details of what it is developing just now. The vendor says its optical gear has been installed by more than 250 operators. (See ZTE Wins Thai Optical Deal, ZTE Touts Optical Success, and ZTE Touts IP, Optical Growth.)

  • Carrier-grade ICT platform: A project to develop an "integrated business platform for international and domestic carriers for their provision of integrated information services to corporate customers." ZTE says the platform is in early use by all three major Chinese operators.

  • RFID technology developments: ZTE says it's using its 107 RFID patents to develop a comprehensive range of "capabilities in electronic tag antenna design, reader series product development, intermediary product research and development, application software product development and radio magnetic field optimisation, covering key sections in the RFID systems integration structure including the base level (data collection), the intermediate level (transmission) and the upper level (application) of the RFID network."

    — Ray Le Maistre, International News Editor, Light Reading

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