Bahrain
Kuwait
Oman
Qatar
Saudi Arabia
UAE
Print
Email
Discuss this article (0 Comments)Expansion plan
by This email address is being protected from spam bots, you need Javascript enabled to view it on Sunday, 25 October 2009
zoomSVP for the Middle East and Africa, Zhang Renjun says the MEA region will play an increasingly important role in the fortunes of China’s ZTE.
ZTE wants to build on the strong base that it has developed in its home market of China and provide the Middle East and Africa region with the networks of tomorrow.
ZTE's senior vice president for the Middle East and Africa, Zhang Renjun, says that in the face of the economic crisis the ZTE has exceeded its growth target for the first half of the year, increasing global revenue and net profit by just over 40% year-on-year with US$4.06 billion revenue during the first half of the year and net profit of $110 million.
"That is very great achievement, compared other telecom vendors," Renjun says. "We were expecting 30%." ZTE has benefitted from China's decision to roll out 3G services, with ZTE and rival Chinese vendor Huawei both snapping up contracts as a results of the targeted $58 billion spending spree on 3G infrastructure.
With its domestic markets providing a solid base the Chinese vendor is keen to pursue further growth in overseas markets. Renjun says that at the moment the Middle East and Africa accounts for 20% of ZTE's total revenue. But he wants that to increase, and by next year he says that ZTE expects the figure to stand at 30%.
"A major area is 3G, and in the fixed line it is broadband," he says. "On the customer side we have enhanced our relationship with the top level international telecom brands like Vodacom, Zain, Etisalat and MTN. And we have reinforced the manpower in the major countries, like South Africa, Egypt, Saudi Arabia and Nigeria."
Economic crisis
Renjun says that so far ZTE has not had any contracts cancelled, despite the economic crisis that has gripped the world's economies and prompted many firms to temper ambitious spending plans. "Even in Middle East and in Africa, our business is still going up, without any cancelled contracts. What has had a little effect is the handset business, because handsets are directly affected by the economic status," he says.
Renjun maintains that Chinese vendors have a low cost advantage over rival vendors, and that with the firm's financing capability it will prove to be more attractive to operators about to embark on costly projects.
ABI Research's wireless infrastructure senior analyst Nadine Manjaro says that ZTE rival Huawei leveraged this tactic to gain market share in Africa and other regions, and she says that it could work for ZTE, "especially in this rough economy where financing is difficult to secure".
"We can get very quick support from the Chinese financial facility, and we already have some reference in Africa, such as in Ethiopia," Renjun says. "We have provided the financing solutions for Econet in Zimbabwe and in Burundi and in South Africa for Cell C."
The ability to lighten the financial burden of expensive capex projects does give vendors an advantage, but it may take time to grab a greater share of the market from rivals with entrenched relationships with some of the region's operators.
Manjaro says ZTE has a good base in the region, but that it has its work cut out if it wants to nudge some of the more established players out of the way. "They are gaining some traction but most of their contracts in the region are since 2008. I would not consider them to be a leading vendor in the region," she says.
Manjaro says most of ZTE's current contracts are CDMA-related, and that WiMAX, as a potential way to get broadband into the region, could be a lucrative option.
CDMA is arguably ZTE's strongest technology in Africa and the Middle East, followed by GSM, while W-CDMA could be described as ZTE's weakest infrastructure product in the region. According to ABI Research, ZTE recently signed five WiMAX contracts in Africa; with LTT in Libya, Econet in Zimbabwe, Copernet in Zambia TMP in Uganda and Chinguitel in Mauritania.
In terms of its GSM business, ZTE has deals with operators for new and expanding networks in Congo, Ivory Coast, Sierra Leone, Ethiopia, Zimbabwe and Mauritania. The bulk of its business has been in deploying CDMA networks, with four projects this year on top of 12 that were sealed last year. Indeed, consultancy firm Frost and Sullivan ranks ZTE as the second largest supplier of CDMA equipment in the world, and it expects that by 2010 it will have increased its 25% market share to 29%, knocking Alcatel-Lucent from its position as the leading CDMA supplier.
Developing voice services is still the major telecom growth point in the MEA region, according to Renjun, but WiMAX is an area that Renjun acknowledges could provide a significant opportunity for ZTE. "Two months we signed very big contact WiMAX contract with Atheeb for almost US$50m, which I think is the biggest WiMAX contract in the Middle East, and one of the biggest in the world. KSA is a rich country but the broadband service there is very poor. We feel that WiMAX will have a good future in KSA, and we hope it can provide a good leverage for other countries," he says.
ZTE's LTE opportunity
Fellow 4G technology LTE also presents an opportunity for ZTE, and Renjun is keen to point out that ZTE has been named as one of the top three LTE network infrastructure vendors by technology research firm Gartner. He says that ZTE has already talked with Etisalat about LTE, but so far nothing has been agreed with the UAE-based operator.
The Gartner report, produced in August, also forecasts that 70% of UMTS vendors will gradually upgrade to HSPA+ and LTE, and that most CDMA operators will choose LTE, which if it proves to be correct, should put ZTE in a strong position as operators look to migrate to the more advanced technology.
Managed services and relationships
In its larger markets, ZTE has deployed some Chinese experts, and Renjun says that the firm is also recruiting more local talent in a bid to enhance service capability, including pre and post sales.
Such a tactic should help address some operators concerns, voiced quietly to CommsMEA, that while Chinese vendors are tough to beat on price, they can struggle when it comes to looking after their customers.
Improvements in relationships with clients, through smarter recruitment and a greater attention to after sales service should also pave the way for an increased role in the managed services sector, an area that Renjun says ZTE already has a presence in.
"We provide managed service to operators in Africa, such as Zain. We have also signed a lot of contracts, for example with in Senegal, in Mauritania, in Sudan and also a contract in Algeria. Some operators just got the new licence and they didn't have the manpower there, and that's why they asked ZTE to provide the managed service."
Handsets and data cards
ABI Research's Nadine Manjaro says that outside of China, the gains made by ZTE on the device side of its business have outstripped those made by the infrastructure side.
ZTE's SVP for the Middle East and Africa, Zhang Renjun, confirms that ZTE is now looking to extend its business from terminals to infrastructure.
ZTE is already a strong brand in its own right in its home market of China, with devices manufactured under the ZTE brand. It also produces ODM (original design manufacture) devices for networks that brand them with their own identities.
The Chinese vendor says that it wants to be one of the top five handset manufacturers in the world by the end of this year. At present, it is sixth.
During the first half of the year, ZTE shipped 27 million devices, 36% more than a year earlier. Data cards are another area where ZTE is keen to expand its share of the market.
"We are the main focus for the major top multinational operators like Zain, Etisalat, and also Mobinil in Egypt. We are a major supplier to them, so compared to 2008, in the Middle East for data card business we have very good growth. We expect that we can get more than 35% share of the market in the Middle East," Renjun adds.
ABI Research's Nadine Manjaro says that outside of China, the gains made by ZTE on the device side of its business have outstripped those made by the infrastructure side.
ZTE's SVP for the Middle East and Africa, Zhang Renjun, confirms that ZTE is now looking to extend its business from terminals to infrastructure.
ZTE is already a strong brand in its own right in its home market of China, with devices manufactured under the ZTE brand. It also produces ODM (original design manufacture) devices for networks that brand them with their own identities.
The Chinese vendor says that it wants to be one of the top five handset manufacturers in the world by the end of this year. At present, it is sixth.
During the first half of the year, ZTE shipped 27 million devices, 36% more than a year earlier. Data cards are another area where ZTE is keen to expand its share of the market.
"We are the main focus for the major top multinational operators like Zain, Etisalat, and also Mobinil in Egypt. We are a major supplier to them, so compared to 2008, in the Middle East for data card business we have very good growth. We expect that we can get more than 35% share of the market in the Middle East," Renjun adds.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
MORE FROM ARABIANBUSINESS.COM
TOP IN MIDDLE EAST TECHNOLOGY
TOP MIDDLE EAST BUSINESS STORIES
ALSO IN MIDDLE EAST TECHNOLOGY
From 
Mobile
