ZTE eye­ing growth prospects in Turkey

Tele­com gi­ant to buy 48% stake in Ne­tas as it sees broader op­por­tu­ni­ties in the Mid­dle East

China Daily (Hong Kong) - - BUSINESS - By MA SI masi@chi­nadaily.com.cn

ZTE Corp said on Tues­day it would spend up to $101.3 mil­lion to pur­chase a 48.04 per­cent stake in a lead­ing Turk­ish tele­com com­pany, as the Chi­nese tele­com equip­ment maker ramps up ef­forts to ex­pand its busi­ness in the Mid­dle Eastern coun­try.

The Shen­zhen-based firm said in a fil­ing to the Hong Kong Stock Ex­change that the deal, once com­pleted, would make it the largest share­holder of Ne­tas Teleko­mu­nikasyon AS, while the Turk­ish Armed Forces Foun­da­tion will hold 15 per­cent.

The ac­qui­si­tion is await­ing ap­proval from the Com­pe­ti­tion Board of Turkey.

“Ne­tas is one of the largest tele­com sys­tem in­te­gra­tion com­pa­nies in Turkey. Its abun­dant lo­cal client re­sources will help us grow a pres­ence there,” ZTE said, adding the trans­ac­tion will be paid for with in­ter­nal funds.

Founded in 1985, ZTE is the sec­ond-largest tele­com equip­ment man­u­fac­turer in China, af­ter Huawei Tech­nolo­gies Co Ltd. It sup­plies tele­com prod­ucts and ser­vices to more than 160 coun­tries and re­gions.

Ne­tas, founded in 1967, posted a rev­enue of $371 mil­lion for the 2015 fis­cal year and its cus­tomers span tele­com car­ri­ers, banks, and gov­ern­ments agen­cies, ZTE said.


Xiang Li­gang, CEO of the tele­com in­dus­try web­site cc­time.com, said Turkey, given its ge­o­graphic lo­ca­tion, can serve as a step­ping­stone for ZTE to ex­pand in the Mid­dle Eastern re­gion, where de­mand for tele­com in­fra­struc­ture is ris­ing.

“It is dif­fi­cult for Chi­nese tele­com com­pa­nies to crack for­eign mar­kets on their own, due to con­cerns over in­for­ma­tion se­cu­rity.”

“The in­vest­ment in Ne­tas will help ZTE bet­ter lo­cal­ize its prod­ucts and re­duce the trou­ble of di­rectly deal­ing with lo­cal clients,” Xiang added.

In­vestors re­sponded dif­fer­ently to the move by ZTE, which is listed in both Hong Kong and Shen­zhen.

ZTE jumped 3.12 per­cent in Hong Kong to close at HK$12.56 ($1.62) on Tues­day, while its Shen­zhen-traded shares de­clined 0.24 per­cent to close at 16.29 yuan ($2.38).

Fu Liang, a tele­coms in­dus­try an­a­lyst, said ZTE is ac­cel­er­at­ing its global ex­pan­sion, as it tries to out­com­pete its ri­vals by mi­grat­ing to post-4G tele­com tech­nol­ogy and the in­ter­net of things mar­ket.

In the first nine months of this year, ZTE’s rev­enue ex­ceeded 71 bil­lion yuan, mark­ing a year-on-year growth of 4.4 per­cent. The firm is also seek­ing growth in the smart­phone sec­tor, launch­ing both pre­mium and bud­get hand­sets around the world.

Thanks to its in­ex­pen­sive smart­phone de­vices, ZTE has be­come the fourth-largest smart­phone ven­dor in the United States by ship­ment, with a 7 per­cent mar­ket share, ac­cord­ing to re­search firm In­ter­na­tional Data Corp.

rise in ZTE Corp’s shares in Hong Kong on the news of its deal in Turkey


Vis­i­tors look at smart­phones at ZTE Corp booth at the Mo­bile World Congress in Barcelona, Spain. In the first nine months of this year, ZTE’s rev­enue ex­ceeded 71 bil­lion yuan ($10.35 bil­lion), a year-onyear growth of 4.4 per­cent.

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