ZTE May Miss Out on Indian Orders Because of Security Rules, Nomura Says

ZTE Corp. may “miss out” on initial orders for building high-speed wireless networks in India as it awaits security clearance for its phone equipment, Nomura Holdings Inc. said.

Talks between the Chinese company and the Indian government to resolve the security issues “could take several months,” Nomura analysts including Sachin Gupta wrote in a report today. India accounted for 8 percent of ZTE’s sales last year, according to the report.

India blocked local phone carriers from buying equipment made by ZTE, China’s second-biggest provider of phone equipment, and bigger Chinese rival Huawei Technologies Co., two people with knowledge of the matter said last week. The restrictions stemmed from national security concerns, according to the people.

Phone carriers in India must get government security clearance before importing equipment under rules introduced in December, according to Nomura. Margrete Ma, a ZTE spokeswoman, couldn’t be immediately reached on her office and mobile phones for comment.

Restrictions on imported phone equipment have prompted Indian carriers to turn to local suppliers to meet demand, Sanjeev Aga, managing director at Idea Cellular Ltd., said yesterday.

ZTE rose 1.6 percent to HK$28.80 at the midday break in Hong Kong trading today, and the company’s Shenzhen-traded shares fell 0.3 percent to 37.14 yuan at 2:28 p.m. local time.

India doesn’t have “a blanket ban” on Chinese equipment, Gopal K. Pillai, the Home Secretary, said on April 30.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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