US to of­fer China's ZTE ‘tem­po­rary re­lief’ on ex­port curbs: of­fi­cial

The Pak Banker - - MARKETS/SPORTS -

The US govern­ment plans to tem­po­rar­ily lift ex­port curbs it im­posed on Chi­nese tele­com equip­ment and smart­phone maker ZTE Corp for al­leged Iran sanc­tions vi­o­la­tions, a se­nior Depart­ment of Com­merce of­fi­cial said. The Com­merce Depart­ment re­stric­tions im­posed ear­lier this month made it dif­fi­cult for ZTE to ac­quire U.S. com­po­nents by re­quir­ing its sup­pli­ers to ap­ply for an ex­port li­cense be­fore ship­ping any Amer­i­can-made equip­ment or parts to ZTE.

The depart­ment had said the li­cense ap­pli­ca­tions gen­er­ally would be de­nied. Shen­zhen­based ZTE has been "in ac­tive, con­struc­tive dis­cus­sions" with the Com­merce Depart­ment for the past week, ac­cord­ing to a se­nior of­fi­cial at the agency. "As part of the ef­fort to re­solve the mat­ter, and based upon bind­ing com­mit­ments that ZTE has made to the U.S. govern­ment, Com­merce ex­pects this week to be able to pro­vide tem­po­rary re­lief from some li­cens­ing re­quire­ments," the of­fi­cial said.

"The re­lief would be tem­po­rary in na­ture and would be main­tained only if ZTE is abid­ing by its com­mit­ments to the U.S. Govern­ment," the of­fi­cial added. The de­tails of the com­mit­ments are ex­pected to be pub­lished this week in the U.S. Fed­eral Reg­is­ter. ZTE said on Mon­day it aims to en­sure all of its op­er­a­tional ac­tiv­i­ties ad­here to in­ter­na­tional stan­dards of its host coun­tries and it will con­tinue to com­mu­ni­cate with rel­e­vant par­ties to re­solve the is­sue as soon as pos­si­ble.

ZTE is among the largest com­pa­nies that the Com­merce Depart­ment has hit with a near-to­tal ex­port ban, ac­cord­ing to pub­lic records.

It is the No. 4 smart­phone ven­dor in the United States, with a 7 per­cent mar­ket share, be­hind Ap­ple Inc (AAPL.O), Sam­sung Elec­tron­ics Co (005930.KS) and LG Elec­tron­ics Inc (066570.KS), ac­cord­ing to re­search firm IDC. It sells hand­set devices to three of the four largest U.S. mo­bile car­ri­ers: AT&T (T.N), TMo­bile US (TMUS.O) and Sprint Corp (S.N)

The ex­port re­stric­tions have drawn protests from the Chi­nese govern­ment and rocked ZTE's busi­ness. Its shares have not traded on the Hong Kong stock ex­change for the past two weeks. The com­pany also said last week it was de­lay­ing the pub­li­ca­tion of its an­nual re­sults while it as­sesses the im­pact of Wash­ing­ton's ac­tion.

ZTE also said it would post­pone its board meet­ing. Its shares last closed at HK$14.16, prior to a trad­ing sus­pen­sion on March 7. Gold­man Sachs sus­pended its cov­er­age on ZTE, say­ing there was not enough in­for­ma­tion to de­ter­mine an in­vest­ment rat­ing, price tar­get and earn­ings es­ti­mates for the com­pany.

Since com­ing un­der fire in 2012 for al­leged deals with sanc­tions-hit Iran and pos­si­ble links to the Chi­nese govern­ment and mil­i­tary, ZTE has ramped up its spend­ing on Wash­ing­ton lob­by­ists.

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