ZTE Looks to Further Broaden International Reach

ZTE Corp. went to great lengths to provide access to key executives including Xu Ming, global GM for the ZTE’s Wireless Business Unit. We basically spent the day together in Shenzhen touring ZTE’s local manufacturing facility and exhibition hall, meeting with key executives and sampling local cuisine over lunch. Additionally, ZTE arranged for me to meet with the CEO and CTO of Hong Kong-based telecommunications provider CSL Ltd., whose primary owner is Australian telecom provider Telstra Corp. Ltd., and view a live LTE demo at CSL’s lab in Kowloon.

  ZTE is a publicly traded, stable and rapidly growing powerhouse with more than 60,000 employees including over 20,000 research and development professionals. ZTE says it invests up to 10% of gross revenues in R&D each year and experienced 40% growth between Q208 and Q209. Along the way, it secured the No.1 equipment provider position in the Chinese marketplace, in terms of incremental units shipped in 2009.

  CSL selected ZTE as its strategic partner and turnkey provider of a recently implemented HSPA+ Software Defined Radio (SDR) network to address several specific challenges including slow data rates and no clear path to LTE. The transition was further complicated by the fact that CSL was operating a network with a pair of technology standards (GSM/WCDMA), and three different spectrum bands (900/1800/2100MHz). Keep in mind that CSL had over 2,000 cell sites in Hong Kong and more than 2.5 million existing customers. In addition to handsets and the HSPA+ network, ZTE is providing CSL with microwave Ethernet backhaul (70–100 megabits per second) and all-IP packet core network equipment. In short, ZTE provided a turnkey network in arguably one of the most RF challenging markets in the world.

  ZTE has proven its ability to secure major tenders in emerging markets as well as developed markets through innovation, customization and an integrated product suite including core networks, SDR access network equipment capable of operating on all technologies and handsets. The big question for 2010 will be whether it can secure a tier-one mobile operator contract. Based upon the company’s successes during the past 24 months, it is hard to imagine a scenario where it does not secure a seat at the LTE table in the U.S. marketplace. Competition will be fierce.

  ZTE also continues to focus heavily on the CDMA market, having recently won a contract to build out a CDMA2000 1x EV-DO Rev.B network for Indonesia’s Smart Telecom and continues to supply equipment to CDMA-based carriers in North America.

ZTE stats:

■    ZTE owns a complete wireless product series, including W-CDMA/GSM, CDMA2000, TD-SCDMA, WiMAX, and a 3G/LTE migration strategy based upon a software defined radio platform.

■    ZTE has more than 60,000 employees including over 20,000 R&D professionals working in nine facilities in China and six overseas R&D facilities. (See RCR Wireless Web site for pictures of ZTE facilities and a video clip of their manufacturing floor in Shenzhen.)

■    More than 50% of ZTE’s revenues are generated outside of China and over 50% of ZTE’s overseas staff is made up of local personnel. Over the past two years, ZTE has transformed and reorganized its staff in an attempt to better serve clients locally and in a converged manner―specifically, integrating the wireless, wireline/core and handset business units to improve customer service.

■    In 2009, ZTE shipped more CDMA and GSM products than its competitors and its handset shipments ranked No. 6 in worldwide shipments and sales volumes. Handset sales made up nearly 22% of ZTE’s revenues in 2008.