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ZTE H1 2016 results: NET profit rises to RMB1.76 billion

R&D Investment ratio close to 15%

ZTE Corporation, a major international provider of telecommunications, enterprise and consumer technology solutions for the Mobile Internet, today announced its results for the six months ending 30 June 2016. The company reported an overall increase in operating revenue of 4.05% to RMB47.76 billion.

ZTE reported a domestic operating revenue of RMB27.8 billion, accounting for just over 58% of overall operating revenue. International operating revenue is RMB19.95 billion, accounting for almost 42% of the group’s overall operating revenue.

Net profit attributable to holders of ordinary shares of the listed company rose to RMB1.77 billion for the six months ending 30 June 2016. Basic earnings per share amounted to RMB0.43.

The reported operating revenue for carriers’ networks business in H1 was RMB28.74 billion. Operating revenue for government and enterprise business amounted to RMB4.61 billion. Operating revenue for the consumer business amounted to RMB14.42 billion. The net cash flow from operating activities reached RMB 2.36 billion, a year-on-year increase of 56.17%.

In H1 2016, ZTE invested close to 15%, or RMB7.06 billion, of their total revenue in R&D, the largest such investment the company has made to date. Continued investment in R&D will contribute to the sustainable development of the company.

ZTE  also announced its new company strategy, M-ICT 2.0, which will drive the company’s growth over the next five years. M-ICT 2.0 is designed to help businesses seize opportunities in an economy defined by the emergence of the sharing economy, the vast use of peer-to-peer networks and dependence on the pervasive range of cloud computing platforms and services. M-ICT 2.0 identifies five key trends: Virtuality, Openness, Intelligence, Cloudification and the Internet of Everything. Encapsulated into the acronym VOICE, ZTE will focus on the individual and interconnected impacts of each trend as they develop products and services. More information about M-ICT 2.0 and VOICE can be found in the ZTE white paper, “M-ICT 2.0: VOICE for a Digital Future”.

Steady expansion of market share in the carrier network market

In the mobile network operator market, ZTE has continued to develop innovative new solutions and increase its market share. The company ranks 1st in 4G global shipments (as it has for three consecutive years) and has successfully increased its market share in both wireless and wired markets. ZTE was named a LTE network infrastructure leader in 2016 according to the Gartner Magic Quadrant. ZTE has the highest global market share in IPTV as a result of breakthroughs in high-end routers, including the T8000, for commercial use. ZTE has the 2nd highest global market share in PON and optic transmission networks.

ZTE actively works with operators to support their transformation to 5G with ZTE’s industry-leading product, Pre5G Massive MIMO, for which ZTE won the 2016 GSMA “Best Mobile Technology Breakthrough” and CTO’s Choice Award. ZTE is now the global leader in the Pre5G industry and has begun deploying its Pre5G solutions in phases in Austria, China, Germany, Japan, Singapore and South Korea. The company has also made major advancements in Telecom Cloud, Big Video, RCS, CDN, SDN/NFV in emerging markets. ZTE continues to lead its peers in helping operators as they transform  their networks and pave the way for sustainable network development. In the IoT market, ZTE is aligned with its M-ICT strategy, raising the bar for IoT, R&D, product design and solution applications, and launching NB-IoT-based products to build foundations for future growth.

Earning positive word of mouth among consumers with premium products

ZTE’s consumer business focused on premium handset devices including AXON and Blade to help it maintain and grow outstanding market share in key markets. In Q2 2016, ZTE rose to join the ranks of the Top 6 global smartphone manufacturers. ZTE Mobile Devices market share is ranked 2nd in Russia; 4th in North America, Sweden, Spain and South Africa; and 5th in Mexico and Australia.

ZTE’s marketing activities, including basketball and football sponsorships in the US, Canada and Germany, to build brand awareness and positive word of mouth. ZTE will continue to maintain mobile experience stores and global consumer campaigns.

The launch of the ZTE 4K smart set top box further increased ZTE’s shipment in the home device space.

Launching of digital TV 4K IP/DVB set-top box, targeting the major telecom operators in key markets of ZTE.

ZTE Smart City solutions implemented in 145 cities 

In the enterprise business, Smart City remains a key engine of ZTE’s growth. ZTE rapidly expanded this business in the first half of 2016 and new orders have increased 40% YoY. This growth stemmed in part from ZTE’s commitment to R&D investment, which has led to new breakthroughs and growth in finance, government and other key sectors. ZTE’s Smart City solutions were used in the CITIC Bank Big Data and Distributed Database Project, which was awarded first prize by the China Banking Regulatory Commission. ZTE’s Smart City solutions have won two other new projects this year.

ZTE Smart City solutions have been implemented in 145 cities worldwide, making ZTE one of the few companies experienced in global smart city construction. In H1 2016, ZTE achieved breakthroughs in the energy market in Europe through innovative solutions such as smart street lights and smart meters.

Looking into the second half of 2016, ZTE will seek to grow by leveraging opportunities that arise as the industry restructures. The company will focus on major strategic directions, namely: in-depth development of the carriers’ market; value creation in government and enterprise business; integration and innovation in the consumer market, and driving business development in the VOICE sectors. ZTE will transition to the M-ICT 2.0 strategy, maintain their commitment to research and development to produce more innovative solutions and strengthen project management. They will pursue mutually beneficial growth with customers, partners and other stakeholders, to create a beneficial, digital ecosystem for the industry.