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TELECOM & INTERNET | Tony Chua, Hong Kong
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ZTE profit down 12% to CNY769mn

Group posted revenue growth of 8.01% for carriers’ networks, 43.96% for terminal products and 42.29% for telecommunication software systems, services and other products.

ZTE Corporation (“ZTE”) recently announced its interim results for the six months ended 30 June 2011.

Based on HKFRS, operating revenue of the Group for the first half of 2011 amounted to RMB37.337 billion, representing a year-on-year growth of 21.52%. Net profit decreased 12.33% to RMB769 million. Basic earnings per share amounted to RMB0.27.

Applying PRC ASBEs, operating revenue of the Group for the first half of 2011 amounted to RMB37.337 billion, representing a year-on-year growth of 21.52%. Net profit decreased 12.33% to RMB769 million. Basic earnings per share amounted to RMB0.27.

In the first half of 2011, the Group reported an operating revenue of RMB16.527 billion from the domestic market, representing a year-on-year growth of 6.83% and accounting for 44.26% of the Group’s total operating revenue. 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, according to a ZTE report.

During the reporting period, the Group reported an operating revenue of RMB20.810 billion from the international market, accounting for 55.74% of its total operating revenue and representing a year-on-year growth of 36.41%. The Company’s diligent efforts in international market development came in a variety of ways. While locking up shares in emerging markets, we continued to make large-scale breakthroughs with global mainstream carriers through cooperation with these operators on products of different modes, assuring year-on-year growth in the Group’s revenue from international business.

Analysed by products, 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 reporting period.

Looking to the second half of 2011, the Company 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 revamping of existing ones to modernised standards. As the nation’s continued to advance its 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, among others, are on the brink 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 Company will seek to maintain a positive balance between scale and profit with the fundamental aim of sustaining stable growth in business scale. We will enhance our efforts in implementing our transformation into an operating business entity, strengthen control over expenses and strive to improve our operating efficiency.

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