ZTE’s New Executives Say Production Back To Normal

Production at China’s ZTE Corp <0763.HK> is back to normal after the lifting of a U.S. ban and its carrier network business will return to a standard growth track in 2019, the Securities Times quoted the firm’s newly elected executives as saying.

China’s No. 2 telecommunications equipment maker <000063.SZ> was crippled in April when the United States banned American firms from selling it parts, saying the company broke an agreement to discipline executives who had conspired to evade U.S. sanctions on Iran and North Korea.

The ban, which became a source of friction in Sino-U.S. trade talks, was lifted in July after ZTE paid $1.4 billion in penalties, allowing the firm to resume business.

“As of today, the main operating business has resumed completely. The production mission for August has resumed to normal and R&D is resuming rapidly,” the Securities Times quoted Chairman Li Zixue as saying at a shareholder meeting at the company’s headquarters in Shenzhen on Tuesday.

As part of the settlement deal with Washington, ZTE, which relies on U.S. suppliers for core components, also overhauled its management team and appointed a new chief executive and chairman.

“We can definitely say the company is still in the front line in the communications industry,” the newspaper quoted CEO Xu Ziyang as saying at the meeting.

“Our orders have been great and are in line with that of July and August last year.”

The company hoped to see its network operating business resume a normal growth path in 2019, he said.

ZTE aimed to beef up research and development, in particular for key components such as chips, and strengthen ties with third-party chip makers in a bid to control risks, he added.

ZTE did not immediately respond to a request for comment.

In July, ZTE flagged the impact of the U.S. supplier ban when it said it expected to report a first-half net loss of 7.0-9.0 billion yuan ($1.1 billion-$1.3 billion) versus a profit of 2.3 billion yuan a year earlier.

The company is due to report its earnings on Thursday.

ZTE’s Hong Kong-listed shares were up nearly 2 percent on Wednesday, outpacing a 0.2 percent gain for the benchmark Hang Seng Index <.HSI>. The firm lost about $3 billion in market value when trading of its shares resumed in June after a two-month suspension. – Reuters