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China's ZTE posts 30 percent rise in first-half profit on 4G, handsets
August 24, 2017 / 9:23 AM / 3 months ago

China's ZTE posts 30 percent rise in first-half profit on 4G, handsets

HONG KONG (Reuters) - Chinese telecommunications equipment maker ZTE Corp (000063.SZ) (0763.HK) on Thursday reported a 30 percent rise in first-half net profit, matching its forecast, as domestic telephone network providers continued to invest in fourth-generation (4G) infrastructure while sales of its mobile phones grew strongly.

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

Profit was 2.29 billion yuan ($344 million), in line with its estimate announced in July. Revenue rose 13 percent to 54 billion yuan, also meeting its projection.

“Looking to the second half of 2017, the company faces new opportunities,” ZTE said in a statement in Chinese. “4G users and traffic will enter a peak period, pre-5G products will have more application, while 5G’s standardisation, technology and testing will experience a breakthrough.”

ZTE said revenue from its telecom equipment business grew 13 pct to 32.4 billion yuan. The business makes infrastructure such as communications towers and accounts for 60 percent of overall revenue.

Revenue in its consumer business grew 24 percent to 17.9 billion yuan, mainly due to increased handset sales overseas.

ZTE is China’s only smartphone vendor with a meaningful U.S. presence. In March, it agreed to pay U.S. regulators a fine of nearly $900 million for breaking export curbs, ending an issue that had the potential to cut off its supply chain.

Its share of the U.S. handset market, including devices co-branded with network carriers, was 11.5 percent in the second quarter from 10.1 percent three months prior, showed data from Counterpoint Research. It remained the fourth-largest vendor there after Samsung Electronics Co Ltd (005930.KS), Apple Inc (AAPL.O) and LG Electronics Inc (066570.KS).

ZTE said it will invest more into wireless and 5G technology as well as international marketing in the second half of 2017.

Revenue from government and enterprise services, its smallest business, declined 18 percent to 3.8 billion yuan.

Separately, ZTE last month agreed to sell 10.1 percent of smartphone subsidiary Nubia for 727 million yuan, retaining 49.9 percent.

Reporting by Sijia Jiang; Editing by Christopher Cushing

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