ZTE swings to net loss on weak operator spending

A slowdown in network equipment and device markets has taken its toll on China’s ZTE, which has reported a net loss of RMB2.84 billion ($457 million) for 2012, compared with a net profit of RMB2.06 billion the year before.

China’s second-biggest network equipment maker, behind Huawei (Shenzhen, China), ZTE (Shenzhen, China) also reported a 2.36% decline in revenues, to RMB84.22 billion.

In a statement accompanying the figures, ZTE pointed to the slowdown in equipment investments by the global telecoms industry in 2012.

A slowdown in network equipment and device markets has taken its toll on China’s ZTE, which has reported a net loss of RMB2.84 billion ($457 million) for 2012, compared with a net profit of RMB2.06 billion the year before.

China’s second-biggest network equipment maker, behind Huawei (Shenzhen, China), ZTE (Shenzhen, China) also reported a 2.36% decline in revenues, to RMB84.22 billion.

In a statement accompanying the figures, ZTE pointed to the slowdown in equipment investments by the global telecoms industry in 2012.

The company also blamed a larger number of low-margin contracts in Africa, South America and Asia for its bottom-line setback.

ZTE is, however, expecting to make a profit for the first quarter of 2013 following its sale of an 81% stake in surveillance systems maker Shenzhen ZNV Technology Co (Shenzhen, China).

ZTE said that 2G networks are gradually being phased out, although operators are still optimizing and upgrading their 3G networks.

The issue of 4G licenses in various countries is also a plus point for ZTE, with commercial 4G deployments gathering momentum.

ZTE is one of the main backers of the 4G TD-LTE standard and says it signed important contracts in India, the Middle East and Japan last year for the rollout of TD-LTE networks.

In the terminals business, meanwhile, the company says it was hit by weaker demand for features phones and data cards as consumers upgrade to more expensive smartphone devices.

ZTE wants to play a more prominent role in this area but faces tough competition from rivals in the US, Europe and Asia.

The company made no reference to its difficulties in the USA, where it was deemed to be a security risk by government authorities last year.

Along with domestic rival Huawei, which faced similar criticism, it has rejected the allegations, although Huawei has been more outspoken on the issue.