ZTE steps up expansion with push into US

PUBLISHED : Tuesday, 12 February, 2008, 12:00am
UPDATED : Tuesday, 05 May, 2015, 9:20am

ZTE Corp, the mainland's second-largest telecommunications equipment maker, has escalated its overseas expansion drive by entering the highly competitive mobile-telephone market in the United States.

The Shenzhen-based company, acting through subsidiary ZTE USA, last week launched its C88 budget camera phone in the US through code division multiple access-based cellular network operator MetroPCS Communications.

'This is a major milestone for ZTE,' said George Sun, the chief executive of ZTE USA. 'The C88 handset shows our ability to align our products with the US market's needs.'

ZTE's supply contract with MetroPCS, the financial terms of which were not disclosed, was signed in December. The sleek clamshell-format C88 camera phone, which has design features reminiscent of Motorola's best-selling Razr slim phone, operates at the 1900- and 850-megahertz bands in the US.

'We see this as the first step towards forging a long-term business relationship with MetroPCS,' Mr Sun said.

MetroPCS has about 3.7 million subscribers and offers service in Miami, Orlando, Sarasota, Tampa, Daytona, Melbourne, Atlanta, Dallas, Detroit, San Francisco, Los Angeles, and Sacramento. The Texas-based operator is the leading provider in the US of unlimited wireless communications service for a flat rate with no signed contract. Its subscriber plans start at as low as US$30 a month.

The firm's other handset suppliers include Nokia, Samsung Electronics, Motorola and Huawei Technologies, China's largest telecommunications equipment supplier.

But ZTE's international expansion efforts in the mobile-phone market come at a time when handset sales growth appears to be slowing and industry stalwarts, such as Nokia and Samsung, continue to boost their market share.

US-based market research firm Strategy Analytics estimated worldwide phone shipments grew a modest 12.3 per cent last year to reach 1.12 billion units, compared with the 22.6 per cent increase posted in 2006 when annual shipments hit one billion units.

'We expect the economic environment to be tougher this year and forecast slower growth of 10 per cent, for [shipments of] 1.24 billion units worldwide,' said Bonny Joy, an analyst at Strategy Analytics.

That forecast has not fazed other telecommunications market watchers who remain bullish on ZTE, which is also a major global supplier of cellular base-stations and various communications infrastructure products.

'We anticipate fast, steady bottom-line growth for the next two to three years,' wrote China International Capital Corp analyst Lisa Li Yuan in a research note.

ZTE, listed on the Hong Kong and Shenzhen stock exchanges, is projected to record a 37.89 per cent increase in total sales to 31.76 billion yuan last year from 23.03 billion in 2006, according to Thomson Financial's consensus estimates from 22 brokers.

The mainland company's net earnings last year are expected to jump 55.2 per cent to 1.19 billion yuan, from 766.97 million yuan a year earlier.

Slowing growth

Worldwide shipments of phones increased 22.6 per cent in 2006

Last year, annual shipments of handsets reached 1.12 billion units, a growth of: 12.3%