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:
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."
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) .
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.
— Ray Le Maistre, International News Editor, Light Reading