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ZTE Records 21.52% Increase in Revenue to RMB37.3 Billion in H1 2011

(2011-8-31 10:15)

ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly listed global provider of telecommunications equipment and network solutions, today announced a 21.52% increase in operating revenue to RMB37.337 billion for the six months ended June 30, 2011.


Based on HKFRS, interim net profit fell 12.33% to RMB769 million. Basic earnings per share amounted to RMB0.27.


Applying PRC ASBEs, operating revenue for the first half also rose 21.52% to RMB37.337 billion. Net profit fell 12.33% to RMB769 million. Basic earnings per share amounted to RMB0.27.


In China, the Group reported operating revenue to RMB16.527 billion, accounting for 44.26% of the Group’s total operating revenue for the first half. Although there was a slowdown in overall investments in the domestic telecommunications industry, the Group ensured growth in operating revenue by improving the competitiveness of its products and by expanding the market share for wireless, data communication, terminal and other products.


During the period, the international part of the Group reported operating revenue of RMB20.810 billion, accounting for 55.74% of its total operating revenue and representing year-on-year growth of 36.41%. Strength from the international market was the key driver for the rapid growth in the first half of 2011. The Group’s diligent efforts in international market development came in a variety of ways. While gaining market share in emerging markets, the Group also continued to make large-scale alliances with global mainstream carriers by cooperating on different products which helped boost revenue from the international business.


Europe and America were the fastest-growing regions among top three overseas markets, rising 62% to RMB8.99 billion, accounting for 24.1% of the Group’s entire revenue. ZTE Asia-Pacific (excluding China) accounted for 18.2% of revenue while Africa accounted for 13.4% of revenue.


By product divisions, the Group registered year-on-year revenue growth of 8.01% for carriers’ networks, 43.96% for terminal products and 42.29% for telecommunication software systems, services and other products during the period.


In wireless products, the Group actively participated in LTE tenders in the Asia-Pacific region, Europe and Latin America. It also secured contracts for large-scale commercial or trial LTE networks as well as 2G/3G network capacity expansion and modernisation projects of global mainstream carriers in the Asia-Pacific region, Eastern Europe, Africa and Latin America. The Group was able to do this by seizing opportunities presented by the global trend of wireless broadband network construction and network modernisation and re-engineering.


As a result, the Group now has a solid market position and presence in the global wireless market. In the first six months of 2011, ZTE won 23 LTE contracts across the world and more than half of them are in Europe, America, Japan and other developed regions. It has made significant growth when compared with the 3G era. The Group formed a strategic alliance with Hutchison to build the world's first TD- LTE / FDD LTE dual-mode network.


Among wireline products, the competitiveness of the Group’s access network products continues to strengthen, with rapid sales growth reported in both the domestic and the overseas markets. Sales of bearer network products are also more competitive. For PTN, the Group became the world’s No. 1 in terms of new market share in the first half of 2011. WDM and other products became more competitive and the optical network remained a global leader. In the first half of 2011, the Group’s FTTx, MASN, DSLAM and other fixed network products were ranked No.2 in the world.


During the first half of 2011, the Group sustained rapid growth in the sale of its terminal products, reporting 43.96% year-on-year growth in sales revenue. Sales of the Group’s terminal products (comprising 3G handsets in various modes and data cards) in the domestic market were gaining pace as the population of domestic 3G users continued to grow. Internationally, the Group sustained strong growth as its terminal products, including the 3G handsets and data cards made breakthroughs among global mainstream carriers.


In the period, the Group expanded sales of higher-end products making ZTE the fifth-largest mobile phone maker in the world.


Sales for smart terminal product increased 400% and Blade, Skate, Light Tab and other products will help the Group to raise brand awareness among customers.


Looking to the second half of 2011, the Group will be confronted with a complex market environment underpinned by opportunities as well as challenges. The rapid development of the mobile Internet will drive large-scale construction of the next-generation LTE mobile broadband network, and supplementary broadband construction is also expected to begin. In addition, the demand for better network quality will drive the construction of new 2G/3G networks and the modernization of existing ones. As nations continue to advance their broadband strategy, the wireline access market will embrace a new cycle of time window construction, while ICT industries such as the Internet of Things, cloud computing and mobile Internet, are on the cusp of a new stage of transformation.


In the second half of 2011, domestic carriers are expected to speed up their capital expenditure. In the international market, mobile broadband construction and the development of smart terminals will remain some of the most sought after segments. The Group will seek to maintain a positive balance between scale and profit with the fundamental aim of sustaining stable growth.


 

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