Telecoms equipment vendor ZTE reported strong growth in profit and revenue for the first half of 2017, with double-digit increases in both its mobile network and smartphone businesses.

The company’s H1 net profit jumped 29.8 per cent year-on-year to CNY2.29 billion ($343 million), with consolidated revenue growing 13.1 per cent to CNY54 billion.

Growth was led by its carriers’ network division, which posted a 12.6 per cent increase in revenue to CNY32.4 billion, representing 60 per cent of total revenue in H1. ZTE said the increase was driven by 4G system products, fixed-line and bearer systems in the domestic market, along with wireless products in the European market.

Consumer group revenue rose 24.1 per cent to CNY17.9 billion from a year ago, on top of what the company said was strong growth in handset sales overseas following its expansion into new markets, as well as home terminal products in China. Revenue at its government and corporate business dropped 18.3 per cent to CNY3.77 billion.

Investment in equipment by the global telecoms industry during the first half of 2017 was characterised by regional disparity, said ZTE SVP Zhang Jianguo.

“As large-scale 5G deployment had yet to begin, investments continued to be focused on 4G networks, optical-fibre transmission and broadband access products,” Zhang said, adding: “Certain carriers did start the deployment of pre-5G networks to alleviate the pressure of network data flow created by the video business, as well as to enhance users’ experience.”

Domestic growth
Operating revenue from the domestic market increased 13.8 per cent to CNY32.3 billion, accounting for nearly 60 per cent of the overall operating revenue.

Turnover from international markets hit CNY21.7 billion, with revenue flat in Asia (CNY8.05 billion), up 25 per cent in Europe, the Amercias and Oceania (CNY12 billion), and down 47 per cent in Africa (CNY1.6 billion).

ZTE said R&D spending increased 6.2 per cent to CNY6.68 billion in the first half of the year, raising its R&D investment in the 12 months to end-June to CNY10 billion. It credited the increase to its ongoing investment in pre-5G, 5G, high-end routers, SDN, OTN and core chipsets.

Looking forward, the company said in a statement it will be “committed to becoming a pioneer in 5G technologies” by taking the lead in standardisation, technical perspective and commercialisation.

Huawei leads
Despite its progress during H1 2017, ZTE’s overall revenue still lags some way behind domestic rival Huawei. The latter booked CNY283.1 billion in sales during the period, which was up 15 per cent year-on-year following what the company said was “solid growth” across its three main divisions, covering carriers, enterprise and consumer businesses.

While Huawei held a commanding lead during the period, its revenue growth slowed compared with the 40 per cent year-on-year rise recorded during H1 2016. The company did not break out H1 2017 profit figures.