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ZTE Nine-Month Net Profit Rises 132% as Operations Strengthen

ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code: 000063.SZ), a publicly-listed global provider of telecommunications equipment, network solutions and mobile devices, reported nine-month net profit increased 132% from a year earlier, as the company executed its operational strategy to improve cash flow and raise profitability.

Net profit attributable to shareholders was RMB 552 million from January to September, with basic earnings per share of RMB 0.16, in line with the company’s earlier forecast. Revenue dropped 10% to RMB 54.66 billion. ZTE posted a quarterly profit after extraordinary items in the July-September period, ending a negative sequence that began in the second-quarter of 2012. ZTE forecasts the company will post a full-year net profit in 2013, after a loss in 2012.

ZTE exercised stringent control over selling, general and administrative expenses, resulting in strong improvement in cash flow in the third-quarter. The positive operational cash flow reported in the third quarter followed a sequence of negative cash flow in the July-September periods in 2009 to 2012.

During the reporting period, capital investment by operators in the global telecommunications industry remained sluggish, with spending focused on 4G networks and the construction of broadband networks, and their ancillary transmission networks. There was also progress in the development of emerging sectors such as cloud computing and the Internet of Things.

In the China market, large-scale TD-LTE network construction will drive investment opportunities for solution providers, while the ongoing implementation of the Broadband China strategy would provide policy support for the development of high-speed broadband infrastructure nationally. ZTE is in a strong position to capitalize on these market opportunities by building our competitiveness and working closely in tandem with the operators.

Internationally, ZTE continued to focus its efforts in major and globally-leading carriers, and gained strong momentum in key sectors such as enterprise and government ICT solutions, services and mobile devices, while consolidating its share of the telecommunications network infrastructure market.

Looking ahead to the next reporting period, equipment investment by the telecommunications industry will remain focused on wireless and broadband systems and their ancillary transmission networks. ZTE will continue to drive product innovation and solution-based operations with a strong focus on mainstream products, while seeking to improve R&D efficiency. The strategy for major markets and mainstream global carriers will be reinforced, as we look to concentrate on markets in which we have strong competitive positions, while vigorously expanding in the enterprise and government ICT solutions, services and terminal segments. ZTE will continue to optimize its resource management and control to streamline operations and improve efficiency.

About ZTE

ZTE is a publicly-listed global provider of telecommunications equipment and network solutions with the most comprehensive product range covering virtually every telecommunications sector, including wireless, access & bearer, VAS, terminals and professional services. The company delivers innovative, custom-made products and services to over 500 operators in more than 140 countries, helping them to meet the changing needs of their customers while growing revenue. ZTE commits 10 per cent of its annual revenue to research and development and has leadership roles in several international bodies devoted to developing telecommunications industry standards. ZTE is committed to corporate social responsibility and is a member of the UN Global Compact. The company is China’s only listed telecom manufacturer that is publicly traded on both the Hong Kong and Shenzhen Stock Exchanges (H share stock code: 0763.HK / A share stock code: 000063.SZ). For more information, please visit www.zte.com.cn.

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