Strong Increase in Revenue Drives ZTE's Growing Global Market Position
19 August 2009, Shenzhen, China - ZTE Corporation ("ZTE" or the "Group") (A share stock code: 000063.SZ /H share stock code: 0763.HK), a leading global provider of telecommunications equipment and network solutions, today announced its Interim results through 30 June 2009. ZTE recorded a revenue of RMB27.7 billion in the first half year of 2009, representing an increase of 40.4% against the same period of 2008 according to ASBEs and HKAS. Net profit was RMB780 million, a year-on-year growth of 40.5 %. Basic earnings per share were RMB 0.45.
During the reporting period, with the benefit of full-scale construction of 3G networks in China, the Group reported operating revenue of RMB14.95 billion in the domestic market, representing a year-on-year growth of 111.7%. The performance of the Company's wireless products, factoring in the network tenders of China Unicom and China Telecom held during the first half of the year, was in line with expectations. On the back of its cost advantage and customization capabilities, the Company achieved significant breakthroughs in the coastal provinces and other growth opportunity regions.
The Company's revenue from its international operations grew 0.7% to RMB12.76 billion in this time period and accounted for 46.0% of its total operating revenue. Second-generation (2G) network construction and capacity expansion in key developing markets, coupled with the demand for bandwidth upgrades and innovative services in developed countries, formed the cornerstones for the stable development of the Group's international market. In 1H09, ZTE continued collaboration with mainstream operators from the world's top 20 most populous countries including Indonesia, Vietnam and Turkey while also successfully forging partnerships with tier-one operators from Europe and the Americas including Verizon, TeliaSonera, Telstra and Telenor.
Specific to product groups, ZTE registered year-on-year revenue growth of 46.2% for carriers' networks, 29.8% for handset products and 29.2% for telecommunication software systems, services and other products during the reporting period.
In the wireless sector, ZTE's industry-leading SDR solution promotes the long-term development of GSM/UMTS/LTE and CDMA products, facilitating a strong increase in market share and competitiveness. The Company's UMTS products have been deployed by mainstream operators in countries with heavy populations including Indonesia, Vietnam and Turkey and branches of Telstra, TeliaSonera and SingTel, three leading global operators. In 1H09, ZTE's CDMA base stations achieved a record high shipment volume of 75,000 units: 1.5 times greater than total shipments in 2008. Meanwhile, the Company's WiMAX products have successfully entered high-end markets including Malaysia, Saudi Arabia, Japan and various European countries. ZTE has also been named a "Top 3" LTE Network Infrastructure Vendor by Gartner, the world's leading information technology research and advisory company, in its latest industry report.
In the wireline sector, ZTE's XDSL maintains a leading position in the industry while its FTTX enjoys world-leading competitiveness. Its bearer network, core network, data and service products all boast great advantages for market competitiveness.
ZTE invests 10% of its revenue to R&D every year. During the reporting period, the Group's R&D cost grew 58.2% -- higher than the growth rate of revenue. Selling and distribution costs and administrative expenses grew 21.4% and 21.0% respectively, and financing expenses declined [8.6]%, lower than the growth rate of revenue, highlighting the Company's sharp focus on and commitment to R&D and administrative improvement.
Mr. Hou Weigui, Chairman of ZTE, said, "The Group will seek to consolidate its businesses with the three leading PRC carriers on the back of its initial market shares in the domestic 3G sector. Meanwhile, the Group will seek to maintain its competitive edge in the international market and focus on large, populous countries as potential emerging markets. We will also strengthen cooperation with key strategic carriers in high-end markets such as Western Europe and North America to unfold further opportunities for cooperation with top-tier global carriers, in response to upgrades of communications technologies taking place in developed countries/regions and changes in the competitive scenario for global suppliers.
"The Group will continue to implement the strategies of differentiation and cost leadership in the second half of the year, seeking to pursue stable development and deliver sound results by enhancing project-based operations and extending its advantages in cost and technology as well as its ability in one-stop project delivery."
Note: ASBEs stands for The Accounting Standards for Business Enterprises, and HKAS for The Hong Kong Accounting Standards.
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About ZTE
ZTE is a leading global provider of telecommunications equipment and network solutions. It has the widest and most complete product range in the world - covering virtually every sector of the wireline, wireless, service and terminals markets. The company delivers innovative, custom-made products and services to over 500 operators in more than 140 countries, helping them to achieve continued revenue growth and to shape the future of the world's communications. ZTE commits around 10% of its annual turnover to research and development and takes a leading role in a wide range of international bodies developing emerging telecoms standards. ZTE leads China's 3G industry with about 30% share of the total 3G equipment market in 2008. A company with sound corporate social responsibility (CSR) initiatives, ZTE is a member of the UN Global Compact that strictly adheres to the Ten Principles of the Global Compact in developing and carrying out CSR programs. ZTE is China's only listed telecoms manufacturer, with shares publicly traded on both the Hong Kong and Shenzhen Stock Exchanges (H share stock code: 0763.HK / A share stock code: 000063.SZ). For more information, please visit www.zte.com.cn.
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