Operator network sales pull down ZTE’s Q3 income by 13% to CNY18.09 billion
Telecom Lead Asia: ZTE has posted 13 percent drop in third quarter revenue to CNY18.09 billion from CNY20.83 billion a year earlier.
The Chinese telecom equipment maker reported a net loss of CNY1.945 billion ($310 million) for the third quarter, compared with a net profit of CNY299.27 million for the same period a year earlier.
ZTE’s revenue for nine months grew 5 percent to RMB60.733 billion.
The marginal growth reflects effect of delayed progress of certain international projects and the collective procurement method adopted by domestic carriers.
A number of low-margin contracts in Europe, Asia and the domestic market have impacted the company’s profit.
ZTE reported 5.21 percent decrease in revenue generated from carriers’ networks.
However, the company posted 15.36 percent increase in revenue generated from terminal products.
It said the company observed rapid growth in 3G handsets sales, and decreased sales of GSM handsets and data cards.
ZTE’s telecommunications software systems increased 23.29 percent. This is primarily due to the growth in sales of video and network terminal products.
In a statement, ZTE said: “During the reporting period, the growth of investment in equipment by the global telecommunications industry continued to slow down, although market demand for smart terminals continued to increase in tandem with the development of the Mobile Internet and the growing variety of mobile applications, while government and corporate networks and the cloud computing sectors provided the driving force behind the development of the ICT industry.”
In China, ZTE was tracking the network construction plans of carriers in a bid to fortify its market shares amidst the slowdown in investments in the telecommunications industry.
“Internationally, though carriers were becoming cautious in their network equipment investment, the Group continued with its efforts in international market development to strengthen cooperation with global mainstream carriers in various products,” ZTE added.