ZTE eyes 30 pc revenue growth

SHANGHAI, CHINA: China's No.2 telecommunications equipment maker ZTE Corp expects group revenue to grow by about 30 percent over the next few years, fuelled by the rapid rise of its cell phone unit, a senior executive said.

ZTE also expects mobile phone revenue to grow 35 percent this year and form half of the group's total revenue in 5 years, He Shiyou, ZTE's head of mobile terminals, said at the Reuters Technology Summit in Shanghai on Monday.

"From the group's perspective, achieving 30 percent revenue growth is the minimum to give a good report to shareholders and investors," said He.

Analysts had expected about a 24 percent rise in total revenue for the year, according to Thomson Reuters. ZTE reported group revenue of 60.27 billion yuan and mobile terminal sales of 13.07 billion yuan last year.

ZTE's mobile terminals segment is the firm's fastest growing unit, booking a 40 percent rise in sales in the first quarter.

"We hope that within five years, mobile phone revenue will form 50 percent of the group's sales," said He, adding that cellphone revenue was around 20 percent currently.

ZTE said carrier network sales were flat in the first quarter and it is banking on the smartphone boom to boost its mobile phone revenue.

"Most of the interest when we talk to U.S. or European clients is in our smartphones," said He.

Smartphones, which allow consumers to surf the Web, send email and run specialized applications on wide, color screens, are increasingly replacing no-frills cell phones for many consumers.

The devices have become a prime battleground for a variety of technology companies seeking to ensure a strong position in the evolving market.

Google Inc displaced iPhone maker Apple Inc to become the second most popular provider of smartphone software in the United States during the first quarter, the latest sign of the increasing competition in the fast-growing mobile market.

He said the open platform nature of Android will enable it to become increasingly popular globally. ZTE is working with China Unicom to launch a $150 smartphone based in the Android operating platform in June this year.

India Woes

ZTE has also been looking to resolve a dispute with Indian authorities on Chinese telecom equipment, which authorities have blocked citing security reasons.

ZTE's larger rival Huawei Technologies has also been affected.

New Delhi has denied any country-specific ban though it has made it mandatory for carriers to obtain security clearance from the telecoms ministry before placing equipment orders.

"Revenue from the Indian market in a year is considered as one of the biggest outside of China...(but) India's pricing is among the most difficult," said He.

India is the world's fastest-growing wireless market with operators signing up 16 million new users a month on average.

Global mobile equipment makers are fighting to win lucrative contracts in Asia's third largest economy.

He did not give a timeframe for the resolution of the conflict but said the impact on ZTE's bottomline was marginal.

"So some people may think that this issue has an impact on our earnings per share, or our earnings, but actually there's not much impact," He said.