ZTE Expects Return to Profit This Year China's Shift to 4G Technology to Aid Company's
By JURO OSAWA
SHANGHAI—Chinese telecommunications equipment supplier ZTE Corp. 000063.SZ +3.45% expects to return to profit this year after posting a hefty loss last year, thanks in part to the country's shift to fourth-generation high-speed wireless networks, an executive said Wednesday.
Long-term evolution, or LTE, networks that Chinese telecom carriers are deploying "give us a major opportunity to grow and also become profitable," said Isaac Liang, a deputy general manager who oversees ZTE's operations related to TD-LTE, a 4G network standard adopted by China Mobile Ltd., 0941.HK +1.98% the country's largest carrier.
In three years, half of ZTE's revenue from wireless infrastructure will likely come from LTE deployment, Mr. Liang said in an interview with The Wall Street Journal.
Last year, ZTE posted a net loss of 2.8 billion yuan ($455 million) due to delays in orders and thinner profit margins. Revenue totaled 84.2 billion yuan, with its wireless infrastructure business contributing about 26 billion yuan.
ZTE provides telecom operators with essential infrastructure such as base stations and antennas, and also makes mobile handsets. China's shift to 4G can benefit both the infrastructure and device businesses, said Mr. Liang.
His comments come as China Mobile, China Telecom Corp. CHA +0.91% and China Unicom (Hong Kong) Ltd. 0762.HK +3.58% prepare to launch LTE networks in the country, which has a billion mobile users. In March, China Mobile said it would spend almost $7 billion this year on construction of its new LTE network, a move that would benefit major suppliers like ZTE and Huawei Technologies Co.
In an interview on Wednesday, Peter Zhou, executive vice president of Huawei's LTE business unit, said that he expects 4G LTE services to begin in China at the end of this year or early next year, starting with major cities like Beijing and Shanghai. Nationwide deployment will take at least two to three years, he said.