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Technology / AI and automation

Problem stricken ZTE sees profits collapse

Chinese telco equipment and smartphone maker ZTE is struggling to sell its wares in a sluggish market, and in face of EU and US government investigations.

The company has been accused by the US of breaching trade sanctions against Iran, and is currently under investigation by the EU for allegedly unfairly benefiting from Chinese government subsidies.

These investigations have seen US companies reticent to use the company’s equipment, preferring instead to use Chinese rival Huawei (now the world’s largest telecommunications equipment manufacturer ahead of Siemens).

This has seen ZTEs net profit for the June quarter fall by an astonishing 85% to ¥94m (£9.3m) when compared to this time last year. Despite this, the company’s revenue for the half year was was ¥42.64 billion (£4.2bn), representing year-on-year growth of 15.2%.

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Another area the company has been battling with Huawei is in the low end of the smartphone market, which they have cornered. Both are now battling the struggling Nokia for dominance of the feature phone market. ZTE also sells white label to the west, and has shown impressive growth in this area. It is now the world’s fourth largest mobile phone vendor overall.

Like Huawei, the company’s figures for domestic infrastructure builds have been weak, as the Chinese Government will not be making 4G LTE licenses available until 2014.

Despite this, ZTE has won an LTE network construction project with China Mobile in Hong Kong, and assisted Bharti Airtel, one of the largest mobile operators in India, with the launch of its first commercial TD-LTE network To date, ZTE has constructed trial and commercial networks in 19 countries for 33 global operators. Of these, nine are commercial networks.


This article is from the CBROnline archive: some formatting and images may not be present.