27 October 2016, Shenzhen, China – ZTE Corporation (0763.HK / 000063.SZ), a major international provider of telecommunications, enterprise and consumer technology solutions for the Mobile Internet, today announced its Q3 results as of 30 September, 2016.
For the nine months ended 30 September 2016, ZTE reported operating revenue of RMB71,564 million, representing a year-on-year growth of 4.44 percent. This primarily reflects year-on-year growth in operating revenue from 4G system products and optical transmission products in the domestic and international markets, as well as handset products and family terminal products in the domestic market. ZTE’s net profit, attributable to holders of ordinary shares of the listed company, amounted to RMB2,859 million, representing a year-on-year growth of 9.78 percent. Basic earnings per share amounted to RMB0.69.
The global average macro-economic values are still weak for the last three quarters in 2016. As a whole, the telecommunications industry is under pressure. In addition, “Internet+” is significantly affecting the format and mode of all kinds of businesses, triggering the upgrade of traditional industries and services. The company continues to adopt a set of development strategies including steady operation, major breakthroughs and pushing new frontiers. The company actively strengthens the application of products and technologies in the mainland market, maintaining its dominant position. For the international market, the company aims to increase its competitiveness through technology and product innovation, helping customers to meet business demands and promote market value. Based on this, the company insists on implementing independent research and development (R&D) strategies and continues to significantly increase investments in R&D. The company has invested RMB9,888 million in R&D in the first three quarters, strongly protecting the its sustainable development.
Chip shipments record historic 5G era high
In its wireless network business, ZTE’s 5G leadership position has been recognised by both the technology industry and the market. The company was the first to complete the initial phase of key 5G technology tests and compared with other vendors, ZTE achieved the shortest time, highest pass rate and broadest coverage. The company's Pre5G massive multiple input multiple output (MIMO) base station has recently been launched in Japan for commercial use and won the Best Wireless Broadband Innovation award at Broadband World Forum 2016 in London.
The company’s chip shipments doubled compared with the same period last year, achieving a record high. It is expected that core wireless solutions encompassing 5G baseband and medium frequency (MF) chips will achieve strong momentum in future. Shipments of mobile terminal chips accounted for 80 percent in overseas markets. There has been a rapid development in IoT chips and ZTE was the first company to support all bands of prototype chips in China and to conduct an IoT test at China Mobile, which has helped to gradually establish a strong industry ecosystem.
In regards to its wired network business as of the end of the third quarter, ZTE's next-generation passive optical networks (PON) market share, the overall growth of fixed-line market access and digital subscriber line (DSL) market share growth all ranked first in the world and ranked second in optical network market share globally.
Incremental improvement in smartphone shipments, with breakthroughs in key strategic overseas markets
From the consumer business perspective, ZTE’s newly launched flagship smartphone series has benefitted from a focus on premium and enhanced quality. The company’s experience in key overseas markets and an increase in brand awareness, along with quarterly improvement in overall sales from the mobile devices business unit.
ZTE has achieved top five positions in terms of shipments among some of the top 20 countries globally. For instance, the company ranked second in the USA’s prepaid market and ranked fourth in overall performance. In addition, countries such as Spain, Russia, Australia and Mexico also ranked among the top five as well. In the domestic China market, its flagship AXON 7 smartphone along with the Blade A1 and Blade A2 series, possesses a massive appeal in quality and affordability which has helped ZTE to increase its overall positive consumer ratings. This is especially true for the AXON 7, which has also received accolades on a worldwide scale.
Continues to drive smart city; further clarifies the M-ICT 2.0 strategy
The company has expanded its worldwide channel partner network with the launch of a new cooperation format, based on the concept of “ecosystem collaboration” covering global high-end markets. Currently, the number of mainland China channel partners has steadily increased to over 4,000 and the company has signed partnership agreements with 2,000 channel partners from more than 40 countries.
For government and enterprises, the company continues to drive the deployment of its Smart City 2.0 concept in other countries and cities, and build different modules for the Silk Road information service platform with reference to local and overseas smart city projects. This will help support the launch of China’s “one-belt, one-road” strategy and establishes a solid foundation for Smart City 3.0 with big data as the core of operation.
The importance of the rail transportation market to ZTE continues with the recent launch of integrated rail projects including those at Xi’an, Chengdu and Chongqing. Collaboration with overseas rail transport integrators continues with breakthroughs achieved in the Indian rail transportation market. In the area of Financial Insurance, ZTE provided a complete IT architecture solution for Tianan Property Insurance, following cooperation with Ping An Insurance. In education, ZTE’s second round of partnership with The Ministry of Education saw it add thirty new schools to the schools’ project. In addition, the company has built on its established presence in Ethiopia in the overseas education market with smart classroom models built in Mackenzie, São Paulo, Brazil. ZTE has also achieved breakthroughs in the overseas radio, film and television markets with the construction of Asia's first tier four national data centre in Bangladesh, which ranks sixth globally.
In Q3 2016, ZTE further implemented its Mobile-Internet (M-ICT) 2.0 strategy, based around the continuous innovation and development of the company's five strategic directions and encapsulated in the acronym VOICE: Virtuality, Openness, Intelligence, Cloudification and the Internet of Everything. For instance, ZTE’s Cloud UniCore virtual network computing (vCN) product won the Best Core Network Product award at the 5G World Summit.
Looking towards the future, the company foresees that its system equipment and smartphone businesses will experience steady growth. ZTE will operate steadily and continue to increase its operating capabilities, driving the M-ICT 2.0 strategic transformation forward, adhering to R&D investment and enhancement in innovation, with the aim of increasing its core competitiveness in areas such as 5G, chips and VOICE. In addition, it will focus on its premium smartphones by enhancing quality, developing channels and looking for new breakthroughs.