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ZTE’s Strength in Smartphones Delivers Increased Profitability and Brand Value



  ZTE’s Strength in Smartphones Delivers Increased Profitability and Brand
  Value

  Forecast-beating 2012 smartphone shipments lay foundations for high-value
                                growth in 2013

Business Wire

SHENZHEN, China -- April 8, 2013

ZTE Corporation (“ZTE”) (H share stock code: 0763.HK / A share stock code:
000063.SZ), a publicly-listed global provider of telecommunications equipment,
network solutions and mobile devices, exceeded the company’s target by more
than doubling shipments of smartphones in 2012, delivering improved
profitability for the terminals division.

The growth in smartphone sales helped ZTE post a gross profit margin of 16.8%
in its terminals division in 2012, an improvement of 1.6 percentage points
compared to a year earlier.

In the United States, ZTE’s smartphone shipments greatly increased, a reward
for the company’s strategy to focus on high-end markets. In emerging markets
including India, Indonesia, Mexico, Argentina and Russia, ZTE also achieved
fast growth. In 2012, the distributors channel contributed 10% of ZTE’s
terminal revenue for the first time.

The strong smartphone sales performance helped ZTE record RMB 1.87 billion of
operating cash flow in 2012. ZTE also posted positive free cash flow and
operating cash flow for the first time in three years.

“ZTE aspires to be the global leader in 4G, and shape the future of smart
devices,” said ZTE EVP and Head of the Mobile Devices Division Mr. He Shiyou.
“For ZTE’s terminals business, 2012 was a year of transition that brought
increased scale, profitability, and a higher profile. The shift to higher
value will continue in 2013.”

The strong growth in ZTE’s smartphone business elevated the company to be the
world’s No. 4 manufacturer during 2012, and helped offset decreasing sales of
feature phone products.

Last year, ZTE unveiled its Grand series to strengthen the company’s
positioning at the high-end of the market. ZTE generated 15% of its smartphone
revenue in 2012 from sales of mid to high-end devices in 2012, and Mr. He aims
to grow the proportion to 25-30% this year.

After a breakthrough year for ZTE smartphones in 2012, the company will
redouble efforts to offer the best devices in 2013, focusing on 4G products
that bring superior intelligence and user experience. ZTE will transition from
a B2B business model to B2C and increase spending on branding and marketing to
connect with end-users more closely, embracing the exciting opportunity
presented by the 4G era. The company will collaborate with operators to focus
on high-end products, LTE broadband devices, intelligent integrated services,
and product innovation, as well as integrate its e-commerce platforms to offer
better and faster services for end-users. In Grand S and Grand Memo, ZTE has
two of the strongest LTE devices debuted in the industry this year. The Grand
S is the new generation flagship smartphone and was the winner of the IF2013
design award. The Grand Memo is one of the highest-specification phablets on
the market. ZTE’s U8910 LTE smartphone is among the first devices selected by
China Mobile in its expanded 4G trial this year.

In the space of two years, ZTE has achieved meteoric growth in its smartphone
business, while maintaining solid profitability. The company is firmly
established among the world’s Top-4 handset vendors. ZTE expects to achieve
30% growth in its smartphone revenue in 2013.

“4G is key to ZTE’s future, and our capabilities in LTE give us a lot of
confidence,” Mr. He said.

Contact:

Media Contacts:
ZTE Corporation
Margrete Ma
+86 755 26775207
ma.gaili@zte.com.cn
or
Edelman PR
Diana Pong / Andres Vejarano
+852 2837 4734 / 2837 4735
diana.pong@edelman.com
andres.vejarano@edelman.com
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