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China's ZTE posts 30% rise in H1 profit on 4G, handsets

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Chinese telecommunications equipment maker ZTE Corp on Thursday reported a 30 per cent 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.

[HONG KONG] Chinese telecommunications equipment maker ZTE Corp on Thursday reported a 30 per cent 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.

Profit was 2.29 billion yuan (S$468.09 million), in line with its estimate announced in July. Revenue rose 13 per cent 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 per cent to 32.4 billion yuan.

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The business makes infrastructure such as communications towers and accounts for 60 per cent of overall revenue.

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

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

Its share of the US handset market, including devices co-branded with network carriers, was 11.5 per cent in the second quarter from 10.1 per cent three months prior, showed data from Counterpoint Research. It remained the fourth-largest vendor there after Samsung Electronics Co Ltd, Apple Inc and LG Electronics Inc.

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 per cent to 3.8 billion yuan.

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

REUTERS