In the Big League

ZTE recorded a revenue of Rs 3,000 crore last fiscal, up from Rs 2,596 crore in 2006-07, a growth of 15.6%. Presently, India is the second largest market for ZTE after China.

The company recorded growth in all segments of operation-transmission, handsets, wireless infrastructure, and broadband. ZTE is one of the leading suppliers of broadband infrastructure equipment to BSNL and also the premier supplier for the rural projects of BSNL.

In FY 2007-08, it received business worth Rs 400 crore through BSNL; increased its terminal business by 102.3% in 2007; and recorded a growth of 400% in the broadband segment.

The main sectors, that contributed to the revenue are CDMA, terminals, GSM, transmission, and broadband. Main orders for the company in the last fiscal came from expansion and network transfer requirements from TTSL, BSNL, Reliance, and Spice. The company also bagged a GSM handset order from Vodafone India and a CDMA handset order from Tata. Undoubtedly, ZTE seeks to become the country's leading telecommunications equipment and high-end service provider.

ZTE 10

The company already has a manufacturing facility at Manesar, and is also planning for an annual manufacturing capacity of 40 mn handsets, targeting the global telecom market. Besides GSM and CDMA handsets, the 30-acre hub will manufacture WiMax enabled handsets and equipment, BTS switches, and other telecom components. Though the location is yet undecided, ZTE plans to invest around Rs 2,000 crore for the project. The company expects another Rs 800 crore investment from component manufacturers, who will partner with ZTE in the venture.

As of now, ZTE's handsets are sourced by most of the telecom operators. However, the company is planning to enter the Indian branded mobile market in a big way using its brand name.

ZTE is also scouting for partners to undertake R&D in the area of broadband and IPTV products, and is believed to be in an advanced stage of discussion with a private Indian telecom equipment maker.

Competitive pricing, coupled with market differentiation, is part of the efforts to beat pricing pressure. Also, the primary concern for the company is heavy competition leading to sharp drop in prices.

With major initiatives like setting up of a manufacturing unit in India and coming up with its own branded handsets, this fiscal is likely to see the company further consolidating its position.

We want to become India's leading telecommunications equipment provider

CEO, ZTE India

Huang Dabin

Address: ZTE Telecom India, 2nd Floor Tower – A, Global Business Park,
Gurgaon – 122001
Tel: +91-124-4323000
Fax: +91-124-4067329
Website: www.zte.com.cn

Highlights

Main orders from TTSL, BSNL, RCom and Spice
Increased its broadband revenue by almost 400%
Terminal business increased by 102.3%
Planning to set up another manufacturing unit in India
Planning to enter the branded handset market
Scouting for partners to undertake R&D in broadband and IPTV

What were your main achievements in FY 2007-08?
In the last fiscal, our wireless products were deployed in developed markets. We were also ranked first in terms of the number of new contracts secured.

With our all IP-solutions, our wireless equipment launched a full-scale attack on the mainstream MTO markets. Operators, ranked among the top 35 in the world, have deployed GSM systems. We also recorded a 300% increase in our delivery as compared to the previous fiscal. Moreover, ZTE topped the global CDMA market in terms of the number of CDMA contracts signed for two consecutive years.

What were your main orders in the last financial year in India?
In the wireless segment, the main orders came from expansion and network transfer requirements from TTSL, BSNL, Reliance, and Spice; while, in the terminal segment, we received a GSM handset order from Vodafone India and CDMA handset order from Tata.

Our target is to become India's leading telecommunications equipment and high-end service provider.

What are the growth drivers in India?
There are four major growth drivers that spur the telecommunication market in India. Firstly, the second largest subscriber base, a growing middle class population and almost 50% of this being under the age of 25 constitutes the basis for rapid growth.

Secondly, a series of government policies and regulation have optimized India's telecommunication investment environment.

Thirdly, market competition has attracted many domestic or overseas investors to divide the telecommunication market both for operators and telecommunication equipment manufacturers.

And finally, India's developed software industry provides the possibility for overseas manufacturers to directly invest and establish R&D centers and production bases in India.

What challenges are you facing in the Indian market?
The fierce competition in the telecommunication industry has brought tremendous pressure on profits. For long term planning, ZTE has two weapons, market differentiation and cost reductions, to deal with it. By satisfying customized demand, market differentiation can increase customer value. Cost reduction puts forward demands on reasonable distribution of resources.

What is the industry outlook for 2008-09 in India?
In 2008-09, more wireless licenses of different systems are expected to be issued to anxious operators. Diversified services will provide more choices for subscribers. For all business operators, a combination of multiple services will be offered to increase customer loyalty.

In GSM system, LTE oriented SDR, network sharing, and spectrum enhancement technology will be important functions developed in wireless infrastructure equipments. Large capacity equipment catering dense area application, as well as pico-bay station equipment for flexible networking, will both be feasible evolution directions. An IP backbone and WiMax backhaul will be widely used in newly built networks, complementary to optical and microwave transmission.