Analysts expect more than a 30 per cent increase in second-quarter revenue and profit from ZTE Corp, a leading mainland telecommunications equipment vendor and phone maker, due to an influx of orders from the mainland and overseas markets. They estimate that ZTE will book second-quarter earnings in the range of 559 million yuan (HK$633.91 million) to 837 million yuan, a 13 per cent to 48 per cent growth. Revenue is expected to be 15 per cent to 37 per cent higher, in the range of 12.7 billion yuan to 15.1 billion yuan. ZTE has benefited from the issuance of third-generation (3G) mobile phone licences earlier this year. The central government issued three 3G licences to state-owned players China Mobile, China Telecom and China Unicom to provide high-speed mobile internet access to customers. The government had previously indicated that the three operators will spend more than 300 billion yuan on 3G network infrastructure, which will benefit equipment vendors such as ZTE and Huawei Technologies. ZTE is the biggest winner in the awarding of mainland 3G network contracts since it provides products for all three 3G mobile technologies - the homegrown TD-SCDMA, the United States-developed CDMA 2000 and Europe's WCDMA. The firm has secured more than 30 per cent of China Mobile's 3G network contracts this year in the third-phase tender covering 200 cities, with deals estimated at 8 billion yuan. ZTE has successfully won major market shares in the TD-SCDMA sector. ZTE is believed to have won a 34 per cent market share in China Mobile's latest 3G tender, which is higher than the 25 per cent it got in the previous round of tender last year. ZTE says it has adopted a low-price strategy to bid for the contract, as the company already has sufficient experience in developing TD-SCDMA-related products. ZTE also did well in China Telecom's CDMA tenders last year and China Unicom's WCDMA tenders earlier this year. But analysts are concerned about whether the strong TD-SCDMA and W-CDMA market share for ZTE will translate into higher earnings growth. Credit Suisse said that given ZTE's big market shares in all three 3G contracts - as well as the GSM network - it could gain high scalability and was expected to maintain its carrier's network gross margin at 35 per cent to 36 per cent in 2009-2010. Nomura International believes profit margins are likely to be the focus for the results, as price competition continues to be intense and ZTE's low-cost leadership is still one of its competitive advantages. For the second quarter, Nomura estimates revenue growth of 37 per cent year on year.