ZTE R&D investment hits new record for 1H2016; unveils M-ICT 2.0

ZTE announced that for the first half of 2016, the company invested close to 15 percent, or RMB7.06 billion (USD1.06 billion), of their total revenue in R&D, the largest such investment the company has made to date.

For the six months ending 30 June 2016, ZTE reported an overall increase in operating revenue of 4.05 percent to RMB47.76 billion.


Domestic operating revenue for the period was RMB27.8 billion, accounting for just over 58 percent of overall operating revenue. International operating revenue is RMB19.95 billion, accounting for almost 42 percent of the group’s overall operating revenue.

Net profit attributable to holders of ordinary shares of the listed company rose to RMB1.77 billion for the six months ending 30 June 2016. Basic earnings per share amounted to RMB0.43.

The reported operating revenue for carriers’ networks business in H1 was RMB28.74 billion.

Operating revenue for government and enterprise business amounted to RMB4.61 billion.

Operating revenue for the consumer business amounted to RMB14.42 billion. The net cash flow from operating activities reached RMB 2.36 billion, a year-on-year increase of 56.17 percent.

ZTE also announced its new company strategy, M-ICT 2.0, which will drive the company’s growth over the next five years.

M-ICT 2.0 is designed to help businesses seize opportunities in an economy defined by the emergence of the sharing economy, the vast use of peer-to-peer networks and dependence on the pervasive range of cloud computing platforms and services.

M-ICT 2.0 identifies five key trends: Virtuality, Openness, Intelligence, Cloudification and the Internet of Everything. Encapsulated into the acronym VOICE, ZTE will focus on the individual and interconnected impacts of each trend as they develop products and services.

For three consecutive years, ZTE has ranked 1st in 4G global shipments . ZTE has the highest global market share in IPTV as a result of breakthroughs in high-end routers, including the T8000, for commercial use. ZTE has the 2nd highest global market share in PON and optic transmission networks, the company said in a statement.

ZTE is now the global leader in the Pre5G industry and has begun deploying its Pre5G solutions in phases in Austria, China, Germany, Japan, Singapore and South Korea. The company has also made major advancements in Telecom Cloud, Big Video, RCS, CDN, SDN/NFV in emerging markets, according to ZTE 1H2016 results.

In the IoT market, ZTE is aligned with its M-ICT strategy, raising the bar for IoT, R&D, product design and solution applications, and launching NB-IoT-based products to build foundations for future growth, the company said.

ZTE’s consumer business focused on premium handset devices including AXON and Blade to help it maintain and grow outstanding market share in key markets. In Q2 2016, ZTE rose to join the ranks of the Top 6 global smartphone manufacturers. ZTE Mobile Devices market share is ranked 2nd in Russia; 4th in North America, Sweden, Spain and South Africa; and 5th in Mexico and Australia.

ZTE’s marketing activities, including basketball and football sponsorships in the US, Canada and Germany, to build brand awareness and positive word of mouth. ZTE will continue to maintain mobile experience stores and global consumer campaigns.

The launch of the ZTE 4K smart set top box further increased ZTE’s shipment in the home device space.

Launching of digital TV 4K IP/DVB set-top box, targeting the major telecom operators in key markets of ZTE.

In the enterprise business, Smart City remains a key engine of ZTE’s growth. ZTE rapidly expanded this business in the first half of 2016 and new orders have increased 40 percent YoY. This growth stemmed in part from ZTE’s commitment to R&D investment, which has led to new breakthroughs and growth in finance, government and other key sectors.

Looking into the second half of 2016, ZTE will seek to grow by leveraging opportunities that arise as the industry restructures. The company will focus on major strategic directions, namely: in-depth development of the carriers’ market; value creation in government and enterprise business; integration and innovation in the consumer market, and driving business development in the VOICE sectors.

Rajani Baburajan

[email protected]