China’s ZTE takes over Netas for $101m, eyes expansion in Turkey

ZTE will become largest shareholder on completion of the deal

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ZTE’s R&D building in Shenzhen. The company has agreed to buy a controlling stake in Netas, a major manufacturer and supplier of telecommunications equipment in Turkey. Photo: Reuters

Published: 8:45pm, 6 Dec 2016Updated: 10:59pm, 6 Dec 2016

ZTE Corp, China’s largest-listed telecommunications equipment manufacturer, has agreed to take over Turkish company Netas Telekomünikasyon for up to US$101.28 million in a deal that would expand its operations across key markets covered by Beijing’s “One Belt, One Road” initiative.

The transaction will see ZTE acquire a 48.04 per cent share of Netas from Dutch investment firm OEP Turkey Tech and become its largest shareholder, according to the mainland company’s filing to the Hong Kong stock exchange on Tuesday.

Established in 1967, Netas is a major manufacturer and supplier of telecommunications equipment in Turkey. It is also a large information technology outsourcing and systems integration services provider to enterprises and telecommunications network operators in Turkey, the Commonwealth of Independent States (CIS), the Asia-Pacific and North Africa.

The Turkish Armed Forces Foundation has a 15 per cent interest in Netas, while publicly traded shares account for 36.96 per cent.

“With Netas’ strong project delivery capabilities, ZTE will further enhance its service capabilities to customers in Turkey as well as several key overseas markets,” ZTE chairman and president Zhao Xianming said in a statement on Tuesday.

The One Belt, One Road trade strategy that President Xi Jinping unveiled in 2013 is composed of two legs: the New Silk Road Economic Belt connecting China with Europe overland and the Maritime Silk Road that links the mainland to the countries in Southeast Asia, Africa and Europe.

Turkey, following the new Silk Road leg, would be an important bridge for ZTE and other mainland companies to grow their business across the vast CIS economies, which include the neighbouring Central Asian republics of Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan and Turkmenistan.