ZTE sets sights on 5G network expansion in Europe despite increased security restrictions

ZTE Corp plans to take part in more 5G network roll-outs in its main overseas market after the European Union decided not to ban Chinese telecommunications equipment vendors, defying security warnings from the US.

In Britain, however, ZTE’s prospects remain uncertain because London has upheld a ban on the company. Its shares were up 4.06 per cent to close at HK$26.90 on Tuesday.

“We believe that the EU toolbox on strategic and technical measures and the UK’s framework to manage security risks will lead to a more transparent and evidence-based method of security assessment and certification,” said Zhong Hong, ZTE’s chief security officer, in a statement released on Tuesday before the market closed.

Shenzhen-based ZTE, the world’s fourth largest telecoms equipment supplier, “has a fully transparent policy regarding allowing our customers, regulatory entities and other interested third parties to perform independent security assessments and audits in our equipment”, Zhong said. He indicated that such investment “supports our commitment in having an active role assisting our customers to strengthen requirements … and ensure full product life cycle risk management”.

ZTE, which is expected to restart manufacturing operations in China on February 10, had no further comment on Britain’s 5G decision, a company spokeswoman said. Britain’s National Cyber Security Centre had initially barred use of ZTE’s telecoms gear in 2018 because of security concerns.

The recent 5G-related policy developments in Europe have come after ZTE raised 11.5 billion yuan (US$1.6 billion) from a private placement of A shares in China last month. The firm will use the funds for working capital as well as 5G research and development, as mass adoption of ultra-fast 5G mobile services around the world are expected to intensify from this year.