ZTE First-Quarter Profit Reaches RMB950 Million After Improvements in Operating Cash Flow

ZTE Corporation (H share stock code: 0763.HK / A share stock code: 000063.SZ), a major international provider of telecommunications, enterprise and consumer technology solutions for the Mobile Internet, today announced its first quarter results for the period ending 31 March 2016.

The Group reported operating revenue of RMB21.859 billion, representing a 4.09% increase year on year. Net profit attributable to shareholders of the listed company amounted to RMB950 million, representing a 15.97% increase from the same period last year. Basic earnings per share amounted to RMB0.23. The Group’s net profit after extraordinary items, operating cash flow and net cash and cash equivalents at the end of the year all made a big progress. R&D ratio hit a historical high 13.96%.

ZTE continues to innovate in line with its M-ICT strategy and set a new record by investing 13.96% of revenue into R&D in Q1. ZTE is among the top three companies for number of PCT patents filed globally and first for the number of invention patents applied for in the mainland. ZTE has filed for more than 22,000 terminal-related patents globally, of which more than 4600 were accepted. More than 500 patent applications were related to the flagship AXON series. This is strategically significant for the internationalization of ZTE’s products, especially in Europe and North America.

In the carrier network market, with continued growth in traditional businesses including LTE and fiber optic networks, ZTE focused on developing cutting-edge technologies and sectors such as Pre5G/5G, Big Video, SDN&NFV and IOT. ZTE has become the leader in Pre5G/5G and a driver for commercial trials through deep collaborations with Softbank and China Mobile, winning the CTO choice award at MWC 2016 as a result. ZTE innovated in sectors such as SDN/NFV and next generation IOT through strategic collaborations with the mainland’s three biggest operators. ZTE’s competitiveness in Big Video also continues to increase, helping operators fulfil the dream of 4K video in the home. ZTE’s converged content delivery network (CDN) products are now commercialized in 80 locations globally with maximum concurrent capacity at 30T.

In the enterprise business, ZTE has won contracts and commenced deployment of Smart City 2.0 solutions in mainland cities including Shenyang and Huaian and has achieved breakthroughs in Europe’s high-end market. Smart rail transport is continuing to grow with major projects in Denmark, Greece and India. ZTE continues to gain competitiveness in the smart energy sector with private power line LTE wireless networks commercialized in more than ten cities in China and power line communication products and solutions breaking through in Africa.

For consumer business, network video communication products and TV set-top boxes are winning an increasing percentage of the global market. ZTE continues to sharpen focus on the high-end smartphones market with the flagship AXON series and Blade A1 series continuing to gain traction and reputation. ZTE’s innovative smart projector Spro Plus is gaining recognition in overseas markets. ZTE has recently sponsored five NBA teams in the US, the Sevilla Football Club in Europe, and will continue to partner with more sports teams to complement its progress in the overseas market. ZTE will also be launching the next-generation AXON phone in the near future.

Looking towards the next quarterly announcement, ‘multiple connections and ultra-broadband’ will become the new trademarks of the M-ICT era. Network operators will benefit from ZTE’s increased value on smart networks to support operators’ transformation from telecommunications operators to information carriers. For Enterprise business, ZTE will continue the focus on key industries and markets, streamlining standard operations and speed-up replication of successful examples to solidify its position in the industry. For Terminal business, ZTE will continue to fortify its competitiveness by increasing brand awareness. Concurrently, ZTE will continue to increase internal managerial efficiencies, especially in talent acquisition to advance core R&D to advance its M-ICT strategy journey.

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ZTE Corporation
Margrete Ma, +86 755 26775207
ma.gaili@zte.com.cn
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