ZTE reports 29% profit boost thanks to mobile network and handsets

ZTE, China’s lesser known technology giant, has reported a surge in profits over the first six months of the year to CNY 2.29 billion (about $340 million), an increase of 29.8%.

Huawei might hog the headlines, but ZTE is not doing a bad job either. Competitors in Europe might be facing tough times, but the gravy train is running smoothly in China. Total revenues across the first six months were up 13.1% to CNY 54.01 billion (roughly $8.1 billion).

In the carrier business, which accounts for the majority of revenues across the group, ZTE has claimed to have deployed 60 pre-5G networks as well as 240 SDN and NFV networks globally. On the wireline side of things, the team has boasted of partnerships with telecoms operators from Germany, Spain, Japan, Russia, Thailand and China, focusing in network virtualisation, 100G optical transmission, and next-generation optical access fields.

Such news should come as a forceful reminder to the likes of Ericsson and Nokia. Concentrate too hard on Huawei, and ZTE might sneak through the cracks. It might not have the global reputation or might of its compatriot, but it has been on the up for some time now. When you look at the numbers, this is not a company you should dismiss too easily.

In terms of the consumer business, ZTE now claims to rank in the top four in the US for handset sales, as well as in the top five in various different markets including Australia, Germany, Canada and Spain. Revenues were up 24% year-on-year to CNY 17.9 billion (roughly $2.7 billion) for the first half, showing there is still room for growth outside of the global super-power brands.

On the R&D side of things, it would appear things are pretty rosy there as well.

“In March 2017, the company was ranked no.1 in the World Intellectual Property Organization (WIPO)’s latest annual list for patent applications, reflecting the company’s increased focus on research and development of next-generation technologies,” ZTE said in a statement.

But what does this actually mean? ZTE has said investment in R&D has increased to CNY 6.68 billion ($1 billion) in the first half of 2017, representing just over 12% of total revenues. The focus here will be on 5G, IoT and cloud computing, though we’re not too sure whether that is work stating; isn’t that everyone’s focus?