Friday, December 7, 2007

ZTE fires billion-yuan shot at energy revenue

ZTE Corp, three of its sister companies and its chairman have invested 1.29 billion yuan (US$174 million) to expand into the energy sector, the Shenzhen-listed company said yesterday.

ZTE, China's biggest public trade telecom equipment company, told the Shenzhen Stock Exchange the associates will establish a joint venture.

ZTE will pay 300 million yuan for 23.26 percent of the JV and Chairman Hou Weigui will take a 1.55-percent stake.

Two associated companies, Zhongxing WXT and Zhongxing Development, will each take a 23.26-percent stake for 300 million yuan and ZTE International will pay 370 million yuan for 28.67 percent, making it the biggest shareholder in the JV called Zhongxing Energy Ltd, ZTE said.

"By forming the JV, the group can further enhance its external investment structure, increase its investment return and develop new profit-generating business," ZTE said in its statement to the exchange.

The scope of the new company covers research and development, investment, generation and sales in the area of energy business.

ZTE's share price rose 2.1 percent to 49.68 yuan against a 3.14-percent jump in the Shenzhen Composite Index yesterday.

China's renewable energy market has the biggest long-term growth potential in Asia.

Market revenue from renewable energy, including wind, biomass and solar, may exceed overall growth by more than 20 percent until 2020, because of the high level of support from the Chinese leadership, according to Merrill Lynch, a US-based investment bank.

ZTE's focus, however, will remain on telecommunications.

ZTE was the biggest winner in the latest 3G network equipment bid from China Mobile, industry insiders said.

ZTE generated a net profit of 603 million yuan in the first nine months, 45.92 percent growth year-on-year, while global giants such as Ericsson reported a decline in profit in the third quarter.

ZTE said yesterday it has an order from China Netcom to supply an IPTV (Internet protocol TV) system in the northern Dalian city, based on homegrown IPTV technology.

(Shanghai Daily December 6, 2007)

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