mike.hibberd@informa.com
New world order
According to one analyst firm, ZTE won more network contracts than any vendor in 2007.
And the company has its sights set on more growth in 2008.
�ounded in Shenzen in 1985 as the
Zhongxing Semiconductor Co.
Ltd, ZTE listed on the Shenzen
Stock Exchange in 1997. The following
year it won a $95m turnkey contract
in Pakistan—which it claims was the
first major overseas telecoms project to
be awarded to a Chinese vendor—and
opened its first research and development
operation in the US. Today ZTE
operates 14 R&D centres across North
America, Europe and Asia.
One of a pair of Chinese telecommunications
infrastructure and handset
vendors (the other being Huawei
which differs from ZTE in that it is
privately owned) that are gaining in
international market share and recognition,
ZTE is doing its bit to change
the mobile industry. As established
Western vendors have embarked on
mergers and acquisitions in a bid
to manage expenditure and improve
scale, ZTE, like its compatriot, has
taken advantage of the cost structure
that comes with being headquartered
in China.
ZTE is performing strongly. According
to a report published by analyst
Gartner, the firm won more mobile
network contracts in the first half
of 2007 than any other vendor. For
the same period, the firm’s revenues
were $2.1bn, an increase of 43.9 per
cent on the corresponding half year
for 2006. Profits in the six months to
June 2007 were $63.7m, up 32.5 per
cent year on year.
Like it’s domestic competitor Huawei,
ZTE has built market share by
targeting operators in emerging markets,
where cost is more likely to be a
dominant factor in supplier selection,
and through strong relationships with
carriers in its home market.
The pair are likely to be winners in
the TD-SCDMA space, should that be
the technology that China’s mobile
carriers select for their 3G deployments.
Even if those carriers opt for
another technology, or decide to wait
and leapfrog to a flavour of 4G, the na-
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ZTE company history
ture of the Chinese market means that
ZTE will likely score a sizeable win.
It’s biggest customer, China Mobile, is
also the largest operator in the world
by subscriber base.
ZTE’s initial strength was in 2G
CDMA, with GSM and subsequently
WCDMA disciplines developed later.
Latterly the firm has been investing its
time and budget in WiMAX—it won a
commercial deployment contract for the
technology in Libya early in 2008. The
contract will see ZTE deploy an 802.16e
network covering eight major Libyan
cities, including the capital, Tripoli.
This was the first WiMAX deployment
in Africa, and the vendor’s chief
representative in Libya says that
he expects it to stimulate further
contract wins, which it feels well
positioned to capitalise on. ZTE is
the only Chinese firm to sit on the
board of the WiMAX Forum and has
21 commercial trials of the technology
1985: Zhongxing Semiconductor Co. Ltd, the predecessor of ZTE,
founded in Shenzen China
1997: Firm lists on the Shenzen Stock Exchange in China
1999: Signs first PHS contract with China Telecom
2000: Launches world’s first CDMA handset with detachable SIM card
2003: Becomes largest CDMA system supplier to Indian carrier BNSL,
constructs Africa’s largest CDMA WLL network in Algeria
2004: First African 3G call made in Tunisia, over ZTE network kit
2005: Becomes China’s largest wireless equipment provider, with a
global wireless capacity exceeding 100 million lines. Ranked as one of
the ‘Top 100 Information Technology Companies’ by Business Week
magazine.
COMPANY PROFILE
underway in markets including Singapore,
Thailand and Saudi Arabia.
In China, according to a report from
analyst firm Forward Concepts entitled
WiMAX ’08: The 3G+ Broadband Alternative,
ZTE envisions the technology
working in conjunction with GSM and
CDMA voice services and is working
to support dual mode terminals that
could provide end users with a single
handset solution. ZTE has already won
a deal to supply WiMAX terminals to
US carrier Sprint Nextel.
According to ZTE, 33 per cent of the
contracts that it won in the first half
of 2007—there were 188 deals in total—were
in Asia Pacific and emerging
markets. As well as China Mobile and
China Unicom, it highlighted key relationships
with Indian player Reliance,
Middle Eastern specialist Etisalat and
Norwegian carrier Telenor, which has a
portfolio of operations in the less developed
markets of Eastern Europe.
India alone is of vital strategic importance
to ZTE, which revealed late in
2007 that it is aiming to generate $1bn
in revenues from the Indian market
in 2008. India generated more than
$800m in revenues for ZTE in 2007
and the firm has marked it out as the
second most important market for its
business outside of China.
Handsets represent a significant part
of ZTE’s play, with Informa Telecoms &
Media ranking the firm just inside the
top six handset vendor listing worldwide.
2007 saw ZTE win a handset supply
deal with Vodafone for terminals
carrying the operator brand, and the
combined handset and infrastructure
offering is a strength that ZTE is looking
to leverage going forward.
Scale built at home and in emerging
markets is being used by ZTE to push
into advanced Western territories and
ZTE says it has established partnerships
with more than 500 carriers in
more than 120 countries around the
world. Its mobile infrastructure has
been deployed by 120 operators in 70
countries, the firm says. »
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