ZTE Q1 Financials Dragged Down By Covid-19


Chinese equipment vendor ZTE’s first quarter results were hit by Covid-19 (coronavirus) lockdown measures, with both profit and revenue declining year-on-year despite boosting capacity to keep up with stronger-than-expected demand for 5G network gear.

Net profit dropped 9.6 per cent to CNY780 million (US$110 million), with operating revenue slipping 3.2 per cent to CNY21.48 billion. Net profit after extraordinary items grew 20.5 per cent to CNY160 million.

The company’s earnings statement didn’t break down revenue by division.

In a statement, the vendor said it scaled up 5G production capacity as the country’s three major mobile operators accelerated infrastructure buildouts, such as 5G and the industrial internet. It also developed new infrastructure-related services in an effort to maintain growth.

ZTE said it secured significant shares of the country’s three major operators’ 5G tenders covering RAN, core network and transport network.

Last week, the vendor was awarded 35.9 per cent share of a massive 5G standalone network tender announced by China Unicom and China Telecom. ZTE’s share is valued at CNY65.87 billion. In late March, ZTE won 28.7 per cent of China Mobile’s phase two 5G contract valued at CNY37.1 billion.

R&D investment for the quarter totalled CNY3.24 billion, or 15.1 per cent of operating revenue, an increase of 1.2 percentage points compared with Q1 2019.

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