42
COMPANY PROFILE
Further consolidation within the
vendor community is widely anticipated
for 2008, as players like Motorola
and Nortel continue to compete
with merged organisations like Alcatel
Lucent and Nokia Siemens Networks.
While Huawei has not ruled out participating
in any future consolidation,
Informa Telecoms & Media’s Mike
Roberts does not expect either of
the big Chinese Vendors to become
involved. ZTE and its domestic rival, he
says, “are probably happy to continue
gaining market share partly through
fierce competition.”
Most vendors are actively seeking
network management contract wins
as the operator environment begins to
shift its form somewhat. With the carriers
themselves looking increasingly
occupied with managing and retaining
their customer base and defining
the service mix, network operation is
falling more and more to the vendor
community.
ZTE is not a major player in this
space, which is dominated today by
Ericsson and Nokia Siemens Networks.
Between now and 2012, Informa Telecoms
& Media forecasts that these
two vendors will grow their share of
this market, as will the second tier of
players that includes Alcatel-Lucent,
Motorola and Huawei. ZTE will need
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to address its participation
in this sphere if it is
to remain competitive in
a vendor market that is
clearly changing.
R&D has been a victim
of the downturn at many
Western Vendors, which
have had to slash headcount
in a bid to remain
competitive. ZTE is keen
to stress its continued investment
in research as an
advantage over other players.
The firm says that 40
per cent of its workforce
is employed in research
and development, and that
ten per cent of annual
revenues are ploughed back into its
various research projects. By 2005,
says ZTE, this had resulted in 3,000
national and international patents
applied for, the vast majority of which
are IPR related.
Like all big vendors in the mobile
industry, ZTE sets great store by the
quality of its people. It has an employee
base of 27,000, with over 70
per cent educated to degree level or
higher. It is perhaps unusual in that
the average age of its employee base
is just 30 years old.
There is little doubt that the rapid
ZTE balance sheet
growth of the Chinese vendor community
has given more established
Western players serious cause for
concern. Given the relatively low
cost of operations that companies
like ZTE enjoy, they simply have not
faced the kind of pressures that have
forced European and North American
players into round after round
of redundancies and mergers and
acquisitions that, at best, have yet to
prove themselves strategically and
commercially rewarding.
When ZTE first appeared on the
wireless scene, it was often portrayed—like
Huawei—as a company
that had little to recommend itself
other than the low cost of its products.
But as more and more operators—including,
crucially, those in the upper
tier—have given these vendors trials
and commercial deals, writing them
off simply as cheap is no longer acceptable.
All of the Western vendors have
made inroads into the Chinese market,
attracted by the sheer scale of
the opportunity. Simultaneously,
that nation has been exporting
its own firms, like ZTE. It simply
remains to be seen whether or not
the Western players can do as well
in ZTE’s market as it clearly hopes
to do in theirs. �
30 September 31 December Per cent
2007 2006 change
Total current assets 28,053,223 20,292,662 38.2
Total non-current assets 7,042,421 5,468,033 28.8
Total current liabilities 17,887,950 11,276,409 58.6
Total long-term liabilities 5,104,574 3,158,448 61.6
Shareholders equity 11,417,999 10,763,946 6.1
(exluding minority interests)
Q3 2007 Q3 2006
Revenue 8,215,952 5,367,597 53.1
Operating profit 85,758 34,260 150
Net shareholder profit 143,005 66,066 116.5
Earnings per share 0.15 0.07 114.3
Unit: RMB in thousands
Mobile Communications International | First for news, best for business
Source: ZTE
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