ZTE Secures $15 Billion Financing Deal As Profits Jump by a Third

China's ZTE Corp. has reported that its full year net profit jumped by 32.5 percent to reach US$239 million and revenue rose by 27.4% to US$6.4 billion. At the same time, the China Development Bank has agreed to advance a US$15 billion credit line to cover ZTE's overseas project financing and credit limits.

During the year, the Group's revenue from domestic operations amounted to US$2.5 billion, representing a year-on-year growth of 18.93%. As for revenue from the international operations, it grew to US$3.9 billion, 33.53% more year-on-year, and accounted for 60.6% of the total revenue of the Group, 2.83 percentage points higher compared with the previous year.

Mr. Hou Weigui, Chairman of ZTE, said, "In 2008, the Group made major breakthroughs and strong growth in the main product areas of GSM, WCDMA, FTTX and optical transmission. In China, we submitted bids for 3G projects of the three major carriers to prepare for undertaking the projects. Outside China, we have made major advances in strategic overseas markets and the multinational carrier market, paving the way for the Group to reach new heights in 2009."

ZTE expects that the rapid deployment of 3G networks in China to establish about 660,000 3G subscribers by mid this year. In the 3G tender bids offered by China's three largest telecom operators, the Group obtained about 30% of the total local market, positioning the Group as the clear leader in China's 3G industry.

In relation to the financing deal with the China Development Bank, both parties will work together to establish an investment and financing platform, including expansion to overseas markets. According to a 5-year cooperation framework agreement, the two companies will develop specific terms and procedures on financing project and how to effectively execute the business cooperation.

In a statement from the bank, it noted that global and leading telecom operators are under enormous pressure to develop next-generation telecom technologies, such as 3G, to meet market demands. However, in view of the current global financial crisis, the majority of mainstream financing agencies based in Europe and the U.S. are trying to find ways to address issues such as inadequate liquidity and credit crunch.

The bank and ZTE will presumably work together on increasing the supply of vendor-financing to secure contracts with overseas networks.

Posted to the site on 20th March 2009