Cash-strapped ZTE raises $321m in property deal with Shenzhen SOE

ZTE is planning to sell two sites it owns to a State-owned enterprise (SOE) in Shenzhen, South China’s Guangdong Province, to alleviate a cash crunch caused by recent legal troubles and fines in the US.

The Shenzhen-based telecom equipment manufacturer revealed in a public announcement on Thursday that it has reached an agreement with Shenzhen Investment Holdings Co (SIHC), a State-owned company, to sell two parcels of land and properties on those sites. One of the sites is in an industrial park in Shenzhen.

“ZTE was having liquidity issues after being forced to suspend operations for a few months when the US government imposed an export ban,” Fu Liang, a Beijing-based telecom industry expert, told the Global Times on Thursday.

Although the ban was lifted in July, the US government imposed a $1 billion fine on ZTE, which was paid in late June. Another $400 million had to be put into an escrow account as part of the settlement.

“The company was deprived of normal sales income for a while, while it had to keep up with fixed costs such as 5G investment and other research and development. If the company resumes normal operations fast, it will be able recover the mortgaged assets quickly,” said Fu.

According to the announcement, SIHC will pay a lump sum of 2.2 billion yuan ($321.2 million) as a first installment, with details of further payments yet to be determined. ZTE said the move will help the company focus on its main business.