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ZTE Bags Another $10B in Credit

Ray Le Maistre
5/22/2009

Need to borrow some cash to build a network? Credit crunch cramping your game plan? Then expect to hear from ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) very soon.

The Chinese vendor had already secured a $15 billion line of credit from China Development Bank in March this year to help fund its international expansion efforts and provide a credit line to operators looking to finance their network rollouts. (See ZTE Secures $15B, Highlights R&D.)

Now ZTE has "entered into a strategic partnership" with the Export-Import Bank of China (China Exim Bank), which is providing the vendor with a $10 billion credit line that can help fund ZTE's overseas development and provide funding to operators struggling to fund their network rollout requirements. (See ZTE Secures More Credit.)

ZTE notes that carriers worldwide are "under enormous pressure to develop next-generation telecom technologies, such as 3G to meet market demands," and that, during the "current global financial crisis, a 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 Exim Bank, on the other hand, "has an advantage by possessing a healthy balance sheet as well as strong financing and credit ability they see positive future prospects for the global telecom industry." [sic]

The news that ZTE, which is aiming to boost its presence in Europe and North America following a year of stellar growth, has $25 billion in credit lines behind it will heap even greater pressure on the traditional infrastructure vendors, some of which expect the global infrastructure market to shrink during 2009 by anything up to 12 percent. (See ZTE Ramps 2008 Revenues, ZTE Unveils New 'Western' Division, Nokia Siemens Braced for Tough 2009, and Verwaayen Unveils AlcaLu's New Plan .)

ZTE and its fellow Chinese telecom equipment supplier, Huawei Technologies Co. Ltd. , though, expect to defy the market and increase their revenues this year. (See Huawei, ZTE Predict 2009 Growth.)

— Ray Le Maistre, International News Editor, Light Reading

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digits
digits
12/5/2012 | 4:04:17 PM
re: ZTE Bags Another $10B in Credit
Good to see that this sort of news isn't just generating the kind of knee-jerk xenophobic responses that sometimes crop up. That's the spirit!
bollocks187
bollocks187
12/5/2012 | 4:04:17 PM
re: ZTE Bags Another $10B in Credit


This is fantastic news for everyone in the industry.


 


Global telecom vendor domintaion by the Chinese vendors - I speak for many when I see we have been eagerly awaiting the arrival of the superior Chinese companies to land in full force on the western shores and show everyone what it takes to be a vendor.


 


 


 

gocowboys
gocowboys
12/5/2012 | 4:04:13 PM
re: ZTE Bags Another $10B in Credit
...and how is this good news?

Anyone know of a US company with a $10B line of credit? Perhaps we need to start building cars and go for a bailout.

Seriously, this is not good news for the US telecommunications equipment manufacturers. This is clearly not a level playing field and in this economy the last thing we all need is an economic obstacle. I have nothing against the Chinese, but when they are given free access to our markets with the benefits government subsidies, ownership and lines of credit...well

In a perverse twist the stimulus money that is supposed to help in the US is actually causing a number of carriers to forestall their purchasing decisions.
bollocks187
bollocks187
12/5/2012 | 4:04:13 PM
re: ZTE Bags Another $10B in Credit


Politicians like journalists-reporters have no credibility or real work experience.


 


 

bollocks187
bollocks187
12/5/2012 | 4:04:12 PM
re: ZTE Bags Another $10B in Credit


My sentiments exactly !


it is not good nes for US manufacturers. LR is like most 'biased' press promoting ZTE and others as they simple see them as a new revenue stream.


 


 

infinityandbeyond
infinityandbeyond
12/5/2012 | 4:04:10 PM
re: ZTE Bags Another $10B in Credit


Hey, err...  


This is my personal view and I can be biased.


Level playing field is when you have no competitive advantage.


Who has money, win these days. Credit crunch is hurting US in general and there is little can be done until credit start to flow. Correct me if I am wrong, Stimulus package didn't go/reach to the telco nor telco vendors.


You can't blame the Chinese. China government has money while US government has debt.


Sorry... :) it is BAD!

gocowboys
gocowboys
12/5/2012 | 4:04:09 PM
re: ZTE Bags Another $10B in Credit


The stimulus money is being administered (mostly) by RUS. The intent of the stimulus money is to provide broadband to under-served areas. As such, there appears to be a lot of debate as to what an undeserved area actually is. In addition, the money will primarily go to the rural providers and they are forestalling their purchases while this all gets figured out. That is actually hurting near term sales of telecommunications equipment to that sector. Hopefully, there will be a mandate that this money can only go to buy equipment from US owned and operated companies; but, I have not heard anything to that effect.


Bottom line, the government does not appear to be doing anything to stimulate the US telecommunications equipment companies. The intent of the stimulus money appears to be directed primarily at the carriers. The Obama administration needs to take a look at the business practices of the Chinese companies. The Chinese market is only partially open and their companies receive substantial benefits from their government. The market is difficult enough without having to compete with companies having undue advantage.


Light Reading appears to be arguing the point that everything is parity. Frankly, it is not and it is also clear that advertising revenues appear to trump honest journalism. Am I surprised? No.

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:04:09 PM
re: ZTE Bags Another $10B in Credit


Actually, NTIA has about 2x the stimulus money that the RUS does.  The money is going to be spent under Buy American rules which gives US companies an advantage.  However, since no company builds strictly american product - I am not sure what the advantage of funding the American companies is (as they will be spending it often outside the US with various CMs, chipmakers and software vendors).


seven


 

paolo.franzoi
paolo.franzoi
12/5/2012 | 4:04:08 PM
re: ZTE Bags Another $10B in Credit
Go,

It is not just CMs but component manufacturers, software vendors, and other parts of the supply chain. Most silicon is packaged offshore. Most optical components are built offshore as well.

That is the problem with an integrated global economy - how do we count a company as American. By your defintion (taken to an extreme), UT Starcomm is a US company as it is HQed in Alameda.

seven
gocowboys
gocowboys
12/5/2012 | 4:04:08 PM
re: ZTE Bags Another $10B in Credit


Actually, you are right NTIA has about $4.7B and RUS has $2.8B. My bad.


The current "buy American" program is thrashing in that they initially mandated that the products be entirely American in composition. As you point out, a number of components and CMs are not based in the US. That is true essentially for all telecommunications products as we don't have all components and manufacturing in this country. Note that is pretty much true for any industry. Now they are backing off that stance in a way that allows foreign competition for this money (see the attached article).


IMHO the key is that a company should be headquartered and based in the US to be eligible for stimulus based sales. Right now Alcatel-Lucent is positioning to get a chunk of this money by helping carriers fill out the forms. Even Huawei could be eligible for this money based upon the direction things are heading.


So, let's see...the Chinese companies get governmental subsidies, lines of credit, ownership....and they have a shot at US stimulus money. What a country!


http://www.xchangemag.com/articles/buy-american-ruin-broadband-stimulus.html


 

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