ZTE's western revenues surge despite US hurdles

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ZTE's western revenues surge despite US hurdles

Profits up by one-third in 2010, with 50% revenue leap in US and Europe to reach 21% of total

By CAROLINE GABRIEL

Published: 18 March, 2011

READ MORE: Financial | China | ZTE

ZTE's bid to reduce its reliance on Chinese business seems to be succeeding, as a strong rise in overseas sales drove it to a 32% leap in full year profit, up to $494m for 2010. The fourth quarter was particularly strong, with net profit up 49% year-on-year.

Full year revenue was $10.67bn, up 17% on 2009's figure, and CFO Wei Zaishen said recently that he expected the company's growth this year to be at least as great as in 2010.

China's second largest telecoms supplier stressed that, for the first time, the largest chunk of its non-Chinese revenue came from the developed mobile economies of the US and Europe, rather than emerging markets, where it has traditionally been stronger. However, although security and regulatory concerns in the west, especially the US, have focused most intensely on Huawei, ZTE does suffer from them too and has complained that it is not being allowed to compete on an even playing field in north America.

All the same, the US and Europe saw a 50% year-on-year leap in revenue and reached 21% of the vendor's total. Total non-Chinese revenue rose by 27.5% to $5.75bn, or 54.2% of ZTE's operating revenue.

Domestic sales were up 5.9% to $4.86bn, mainly because of 3G expansion by China Unicom and China Telecom, but ZTE also saw 50% growth in its homeland's government and enterprise sectors. It said it started selling high end data equipment to carriers during 2010 too.

On the handset front, ZTE is getting more deals with tier one carriers like Verizon and Vodafone and it took fourth place in the global market during the fourth quarter, overtaking Apple and RIM. It shipped 16.8 units in that quarter, up almost 77% on the year-ago period. Its challenge now is to try to rebalance its predominantly low end business towards higher margin smartphones.

This year, the firm said its priorities are to increase its market share in all markets and particularly deepen its relationships with tier one cellcos, "moving from strategic engagement to strategic cooperation", as well as developing its LTE business. In R&D terms it will focus on some key emerging technologies such as cloud computing.