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Li Tao

ZTE Corp, the world’s fourth largest telecommunications equipment supplier, is accelerating deployment of its 5G gear overseas amid a potential decrease in capital spending by mobile network operators in China.
Shenzhen-based ZTE said on Tuesday that it has already secured 35 commercial 5G network supply contracts across major markets around the world, as the company pushed to turn around its business this year from a record 7 billion yuan (US$991 million) loss in 2018 when it ceased major operating activities for nearly four months under a US trade ban that was later lifted.
The firm projected its overall net profit this year to range from 4.3 billion yuan and 5.3 billion yuan, according to a statement released after the close of trading in Hong Kong and Shenzhen.
Its preliminary estimates show that net profit for the quarter ended September 30 reached 2.7 billion yuan, up 371 per cent from the same period a year ago. Revenue grew a modest 1.5 per cent to 19.6 billion yuan.

Shares of ZTE rose nearly 1 per cent to close at HK$21.55 on Monday before its third-quarter results were announced.
Despite the strong quarterly profit, which was helped by a one-off real estate transaction gain, ZTE faces some major challenges in its home market, according to analysts.


In September, Jefferies cut its rating of ZTE to “underperform” from “hold” because of a plan by China Telecom and China Unicom to jointly build their 5G network as well as share development of one 5G rural network with China Mobile.
“We estimate that the recently announced plans ... could reduce China’s total telecoms capital expenditure over the next eight years by roughly 10 per cent,” Jefferies analyst Edison Lee said in that report.
That 5G infrastructure strategy could potentially hurt ZTE because the company generated about 72 per cent of its carrier equipment business in China in 2017 and 2018. Carrier revenue from its home market made up close to 50 per cent of ZTE’s total revenue in each of those years.
Huawei, ZTE expand share in global telecoms gear, but all eyes are on the second half amid trade tensions
That would make a 10 per cent reduction in the size of 50 per cent of ZTE’s potential market “a material negative for its growth prospect”, Jefferies’ Lee said.
Still, ZTE remains optimistic about its international operations. By the end of September, ZTE established 5G cooperation pacts with more than 60 mobile network operators across the globe, according to the company’s statement.
For its consumer business, ZTE said it has strengthened cooperation with more than 20 mobile network operators worldwide in distributing its 5G terminals. ZTE’s Axon 10 Pro 5G, for example, became the first commercial 5G smartphone released in China, Northern Europe and the Middle East.

For more insights into China tech, sign up for our tech newsletters, subscribe to our Inside China Tech podcast, and download the comprehensive 2019 China Internet Report. Also roam China Tech City, an award-winning interactive digital map at our sister site Abacus.



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ZTE steps up 5G network gear deployment overseas as capital spending in China is set to decline

ZTE Corp has established 5G cooperation pacts with more than 60 mobile network operators across the globe. Photo: EPA-EFE

Telecommunications equipment maker ZTE Corp displays its range of 5G mobile base stations inside its booth at MWC Barcelona. 25FEB19 SCMP / Bien Perez

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Visitors tour an exhibitor booth with a 5G on display at the Smart China Expo in southwest China's Chongqing Municipality, 2019. Photo: AP

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The increased pace of 5G infrastructure spending in China and various overseas markets has benefited Huawei Technologies and ZTE Corp, which recorded higher share in the global telecommunications equipment market in the first half of this year. Photo: Agence France-Presse

Telecommunications equipment maker ZTE Corp’s giant booth at MWC Barcelona. 25FEB19 SCMP / Bien Perez

Huawei Technologies, the world’s largest telecommunications equipment supplier, has grown its global market share in the first half amid increased 5G network gear spending in China and various overseas markets. Photo: Xinhua

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The Shenzhen-based company has secured 35 commercial 5G equipment supply contracts across major markets around the world



The Shenzhen-based company has secured 35 commercial 5G equipment supply contracts across major markets around the world.


ZTE steps up 5G network gear deployment overseas as capital spending in China is set to decline

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} The Shenzhen-based company has secured 35 commercial 5G equipment supply contracts across major markets around the world

The Shenzhen-based company has secured 35 commercial 5G equipment supply contracts across major markets around the world