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ZTE earns good boy points in Q1 results

Cheerful students with thumbs up

ZTE has reported a healthy 27% boost in profits for 2017 Q1, following its removal from the US shit-list for dodgy dealings in the Middle-East.

Only a matter of weeks ago, the Chinese kit-vendor pleaded guilty to breaking US trade rules by exporting products to Iran, after an investigation in the US found that ZTE had either directly or through third-party distributors shipped $32 million worth of products containing American-made equipment to the country. The $1.2 billion fine took the giant from profit to loss over the course of 2016, though it doesn’t seem to be looking back with its first quarterly call of the new year.

ZTE reported a 27.8% year-on-year rise in first-quarter profits to 1.2 billion yuan, roughly $174 million, while revenue increased 17.8% at 25.75 billion yuan, just over $3.7 billion. The team also claim 13% of revenues across the quarter were invested in the R&D division. Although ZTE does not give too much detail on the specific divisions, the team highlighted increased sales of carrier network solutions and smartphones fuelled the growth.

We’re not able to attribute financial values to each of the divisions, but the company does claim the following across the period:

  • ZTE pre-5G products are deployed in 40 networks in 30 countries
  • 5G pre-commercial deployments will begin in Q3 2018, with full commercial deployment in 2019
  • ZTE Big Video business posted 25% growth in shipments of set-top-boxes
  • On the IoT side of things, ZTE self-developed chipsets for NB-IoT posted 70% y-o-y shipments growth

The team also made highly generic, PR-laden comments regarding the performance of its smartphone business, as well as the smart cities unit, though there was no proof to back up positive gains.

The news is certainly positive for ZTE, and does further highlight the problems being faced at Nokia and Ericsson, who can’t seem to turn the corner into growth. It also demonstrates growth isn’t a phrase we can reserve solely for the Huawei giant, but to put things in perspective, Huawei group annual revenue exceeds that of Ericsson, Nokia and ZTE combined. ZTE might be profitable, but it still has a bit of work to do.

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