YOU ARE AT:APACZTE to return to profit in Q1 after recovery from U.S. sanctions

ZTE to return to profit in Q1 after recovery from U.S. sanctions

ZTE expects profits for the first quarter to reach almost $179 million

Chinese vendor ZTE Corporation forecasted a first quarter profit of up to CNY 1.2 billion ($178.18 million) as it recovers from sanctions imposed by the U.S. government in 2018.

Shares of ZTE rose as much as 14% on Thursday following this announcement.

ZTE said it expected to make a net profit of CNY800mn-1.2bn in the first quarter of 2019, up from a net profit of CNY 276 million in the previous quarter.

For full 2018, the vendor posted a net loss of CNY6.98 billion, which was within the estimated range disclosed in the preliminary announcement of 2018 annual results. ZTE said that the 2018 results were mainly attributable to the $1 billion penalty imposed by the U.S. government.

ZTE said its revenue for the quarter ending in December was CNY26.7 billion, while its full-year revenue dropped 21.4% to CNY85.5 billion.

“During the reported period, ZTE’s major business continued to recover, bolstered with the window of opportunity of 5G development and its technological innovation capabilities. The company has become a key supplier with 5G end-to-end solution capabilities,” the vendor said in a statement. “It has core competitiveness of complete 5G product series, with a perfect product layout, serialized solutions and a rich business ecosystem in key areas, such as 5G wireless, transport, core networks, vertical industry applications and devices.”

In the wireless networks segment, ZTE said it has strengthened its investment in key wireless technologies and important markets. It has collaborated with 30 global operators in 5G, with the shipment of Massive MIMO base station reaching 10,000 and more than 400 NFV commercial and PoC cases worldwide.

“In the wireline networks segment, ZTE has seized the opportunities of technological revolution, such as 5G transport, big video, next-generation PON, SDN/NFV, and continued to optimize the market layouts. The company has maintained its industry leadership in terms of the core technical indicators and commercial trial progress of 5G transport.”

In the field of 5G industry applications, ZTE said it has collaborated with operators and partners to carry out 5G service innovation demonstrations in vertical industries, such as big video, Internet of Vehicles, industrial Internet and smart grid.

As part of an agreement with the U.S to lift economic penalties, ZTE implemented a compliance program last year. “Taking compliance as the strategic cornerstone of the company, ZTE adheres to compliance management, and continuously strives to build a comprehensive and integrated compliance program, including export control, anti-bribery compliance and data protection compliance, expecting to prevent risks and guarantee the company’s sustainable development.”

In March 2018, the Department of Commerce’s Bureau of Industry and Security (BIS) imposed a seven-year export ban to ZTE after it found that the vendor had violated sanctions the U.S. had imposed on Iran and North Korea.

In early May, ZTE ceased its major operating activities due to the ban, which did not allow U.S. firms to ship key components, including chips, to ZTE.

In June, the Trump administration reached a deal with China to ease the penalties, allowing ZTE to resume business.

 

ABOUT AUTHOR

Juan Pedro Tomás
Juan Pedro Tomás
Juan Pedro covers Global Carriers and Global Enterprise IoT. Prior to RCR, Juan Pedro worked for Business News Americas, covering telecoms and IT news in the Latin American markets. He also worked for Telecompaper as their Regional Editor for Latin America and Asia/Pacific. Juan Pedro has also contributed to Latin Trade magazine as the publication's correspondent in Argentina and with political risk consultancy firm Exclusive Analysis, writing reports and providing political and economic information from certain Latin American markets. He has a degree in International Relations and a master in Journalism and is married with two kids.

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