China's ZTE Corp to raise $2 billion in share placement for 5G plans

FILE PHOTO: People stand at ZTE's booth during Mobile World Congress in Barcelona, Spain, February 27, 2017. REUTERS/Paul Hanna/File Photo

HONG KONG (Reuters) - Chinese telecom equipment maker ZTE Corp said on Wednesday said it planned to raise 13 billion yuan ($2.1 billion) via a private placement to support 5G mobile network technology development.

ZTE said it planned to issue no more than 687 million of its Shenzhen-listed A shares with a par value of 1 yuan per share to less than 10 specific subscribers, supporting its plans to invest 42.9 billion yuan over three years in 5G technology.

The pricing and issuance date of the new shares would be determined pending the securities regulator’s approval, it said in a filing to the Shenzhen and Hong Kong stock exchanges.

ZTE and its rival Huawei Technologies are key players in China’s push to be among the world’s first to build a 5G network by 2020. The next generation communication technology is supposed to be at least 10 times faster than the 4G network.

The firm said 9.1 billion yuan of the funds raised would be used for 5G technology research and product development and 3.9 billion yuan to replensh working capital.

“The company expects that 2018 to 2020 will be a crucial period for the formulation and industrialization of the global standard for 5G technology,” ZTE said in its filing.

ZTE’s Shenzhen-listed shares closed at 31.12 yuan on Wednesday before the announcement.

Reporting by Sijia Jiang; Editing by Edmund Blair