How 4G of China Mobile, China Telecom and China Unicom reviving ZTE

4G LTE network roll out by three telecom operators — China Mobile, China Telecom and China Unicom –are reviving the fortunes of ZTE.

In coming months, ZTE will also be betting on India for its growth. ZTE is currently working with Bharti Airtel in India.

There are two indicators for the increase in the confidence of ZTE in the 4G infrastructure business.

First, the Chinese telecom network vendor ZTE said its net profit for first half of 2014 will grow between 223 percent and 271 percent to between RMB 1 billion and RMB 1.15 billion, raising its forecast.

ZTE, one of the main vendors of 4G in China, is benefitting significantly from strong momentum in its 4G infrastructure operations. 4G LTE infrastructure accounted for an increased proportion of revenue. ZTE supplies 4G infrastructure to China Mobile, China Telecom and China Unicom.

Its earlier guidance was between RMB 800 million to RMB 1 billion.

Second, ZTE today said 4G devices will account for 40 percent of total terminals shipments in 2014. ZTE achieved strong performance in the United States, especially in the prepay handset market, benefiting from the availability of new innovative products and cooperation with partners.

“The LTE network build taking place in China is going to result in a significant upside for LTE-enabled smartphones and tablets. Specifically, TDD-LTE devices are poised to be the world’s fastest-growing segment as the Chinese market joins the LTE smartphone revolution,” said Godfrey Chua, directing analyst for M2M and The Internet of Things at Infonetics Research, recently.

ZTE India

The third area that will contribute to ZTE will be its enterprise business.

ZTE is supplying its Smart City solutions to 108 cities in China. Customers including Tencent, Bank of China, China FAW, PetroChina, and China Eastern Airlines are using ZTE technology applications and solutions to deliver improved operational agility and efficiency.

ZTE expects its business will benefit from the award of FDD-LTE licenses in China, and the investment in 4G networks in markets such as Japan and India. The consolidation in the telecommunications market in Europe will also offer new opportunities for ZTE.

In the Mobile Devices division, ZTE expects to benefit from the strong overseas operations.

Ericsson and LTE market position

Meanwhile, Gartner said Ericsson, one of the main rivals of ZTE, signed more than 190 commercial contracts for LTE and Evolved Packet Core (EPC) in more than 70 countries on six continents, of which more than 140 networks have already gone live commercially.

Ericsson has supported all the world’s first commercial VoLTE launches and is the IMS market leader with more than 115 IMS contracts worldwide for both fixed- and mobile accesses. Ericsson is present today in all high traffic LTE markets including US, Japan, South Korea, Australia and Canada, and has been selected by the top 10 LTE operators as ranked by LTE subscription worldwide.

Today, 50 percent of the world’s LTE Smartphone traffic is served by Ericsson networks which is more than double the traffic of our closest competitor.

Nokia and China Mobile

Nokia Networks recently claimed that it is the only non-Chinese vendor to win a double-digit unit share from China Mobile. Its contract with China Mobile enables Nokia Networks to expands its 4G footprint in China to cover 18 out of 31 provinces, including mega cities and provinces such as Beijing, Shanghai and Guangdong.

LTE market forecast

The market for LTE network infrastructure will grow from $16.7 billion in 2014 to $38.2 billion in 2018, to account for 80 percent of spending on mobile network infrastructure, said Gartner.

Gartner Forecast: Carrier Network Infrastructure, Worldwide, 2011-2018, 1Q14 Update says LTE will show a CAGR of 23 percent over this period, and that it will remain the fastest-growing segment not just of the mobile network infrastructure market, but of the overall CSP network infrastructure market as well.

Gartner on Cisco 4G

Cisco will take time to make an impact on a range of CSPs’ infrastructures due to its limited experience with wireless products, weakness in related professional services, and the perception among some CSPs that it is principally an IT and IP player.

CSPs typically do not want many large vendors in their list of strategic suppliers and are often very choosy when considering newcomers. Although the lack of a macro radio network offering for LTE is a weakness, Cisco could effectively position its core network and small-cell offerings — and possibly a neutral approach to multivendor networks — to CSPs.

Baburajan K