ZTE today informed its investors that it is expecting to post a net loss of 7-9 billion yuan or $1.05-$1.34 billion in January to June period versus a profit of 2.3 billion yuan the previous year.
Chinese telecoms equipment group ZTE the net loss in the first half of the year is due to the hefty fine it agreed in order to lift a U.S. ban on component supplies.
ZTE, which makes smartphones and networking gear, signed an agreement with the United States on Thursday that paved the way for it to resume operations after a nearly three-month ban on doing business with American suppliers.
The settlement ZTE reached with the U.S. Commerce Department included a $1 billion penalty and a deposit of $400 million in an escrow account.
“The substantial decrease in results was mainly due to operating losses and provision for losses resulting from the suspension of the major operating activities,” ZTE said in the exchange filing.
ZTE earlier changes its board of directors and top management as per its commitment to the US to remove the 7-year ban on sourcing technology components from US based companies such as Qualcomm, Intel, Google, etc.