China's ZTE expects net profit to rise 43 per cent as 4G network adds wind to sails

PUBLISHED : Tuesday, 21 July, 2015, 8:10pm
UPDATED : Tuesday, 21 July, 2015, 8:13pm

ZTE, China’s largest listed telecoms equipment manufacturer, expects to post a 43 per cent year-on-year increase in first-half net profit on the back of hefty infrastructure sales in its home market.

Preliminary estimates by Shenzhen-based ZTE showed that its net profit for the first six months of this year reached 1.613 billion yuan (US$263 million), up from 1.128 billion yuan in the same period last year.

In a filing with the Hong Kong stock exchange on Tuesday, ZTE Chairman Hou Weigui attributed that growth to “faster progress of domestic 4G projects, and increased investments in wireline switch and access systems by the three major operators”.

ZTE and rival Huawei Technologies have won the bulk of 4G network supply contracts from China Mobile, which was the first to roll out 4G services in the domestic market last year.

China Unicom and China Telecom started their respective 4G mobile infrastructure deployments this year.

ZTE estimated its first-half revenue grew 21.86 per cent to 45.937 billion yuan, from 37.697 billion yuan a year earlier.

In a report, Jefferies analyst Cynthia Meng said ZTE showed strong market share in the 4G projects of the three Chinese telecoms network operators.

Meng said ZTE had cornered a 38 per cent share in phase three of China Mobile’s 4G network expansion programme. 

The company’s market share in Unicom’s 4G deployment was estimated to be between 32 per cent and 35 per cent, while its share in China Telecom’s 4G rollout was more than 40 per cent.

As at June 30, ZTE’s total assets rose 7 per cent to 113.537 billion yuan, up from 106.214 billion yuan the previous year.

Shares of ZTE closed up 1.17 per cent to HK$19.06 on Tuesday.