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ZTE numbers show it’s hot of the tails of Nokia and Ericsson

ZTE MWC 2016

ZTE has published guidance for its most recent quarter, with the poor-man’s Huawei showing Ericsson and Nokia you can make money if you try hard enough.

For the three months leading up to December 31, operating revenue was RMB 108.82 billion, roughly $17.27 billion, a year-on-year increase of 7%. The company might still be sitting at the back of the pack when measured against the other kit vendors, but its financials are heading in the right direction.

That said, while total revenues are heading north, profit wise this is not a year which is going to break records. Over the course of the year, profit stood at RMB 4.55 billion (roughly $720 million) though this was a 293% increase year-on-year.

The nitty gritty details have not been released just yet, but should this guidance prove accurate it does put the woes of Ericsson and Nokia into perspective. Some might complain that Huawei is hoovering up any positive growth in the industry, to the detriment of everyone else, but ZTE is proving the problem is with Ericsson and Nokia themselves, no with the Huawei threat. If it can grow under the pressure of the market leader, the others should be able to as well if they sort their house out.

Moving forward, more interest might be inspired in ZTE after it has bolstered its R&D pot. A couple of days ago, the ZTE board announced it had approved the issuance of 686,836,019 A Shares in an effort to raise capital for 5G research and development. The company isn’t just talking a good game, it is exploring different options to raise cash to fund the 5G dreams.

Over the course of 2017, ZTE noted its main focus was developing relationships with mainstream carriers and high-value customers. Slowly but surely, ZTE is starting to prove itself on the global stage. Financial announcements like this perhaps indicate the company is gaining more international customers, which will almost certainly have a positive effect moving forward.

Humans generally have a bit of a sheep mentality, and if ZTE is improving its numbers year-on-year it will inspire confidence in new customers. ZTE might still be behind Nokia (which brought in €23.2 billion across 2017) and Ericsson (roughly €20.47 billion) but these two should be looking over their shoulders. ZTE is attracting new customers and hoovering up market share.

Interesting enough, should Ericsson and ZTE have a repeat performance in 2018, Ericsson dropping 12% of revenue and ZTE increasing 7%, the Chinese vendor would overtake the Swedes as the number three player (revenues). There are of course a number of factors you would have to take into account, such as ZTE operates in the devices market whereas Ericsson doesn’t, but it is certainly an interesting little stat to keep an eye on.

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