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ZTE Wins Order to Build Network for Alibaba’s China Data Traffic

ZTE Corp. (763), China’s second-largest telecommunications equipment maker, said it won a contract to build an optical network for Alibaba Group Holding Ltd. to carry most of the e-commerce company’s data traffic.

The first stage of the project will cover Hangzhou, where Alibaba is based, as well as the cities of Beijing and Tianjin, ZTE said in an e-mailed statement. Financial terms of the contract weren’t disclosed.

ZTE overtook Alcatel-Lucent SA (ALU) in the first quarter to become the second-largest supplier in the global $14.5 billion optical networking market behind Huawei Technologies Co., researcher Ovum said in a report last month. Sales on Alibaba’s Taobao and Tmall sites surpassed 1 trillion yuan ($163 billion) last year, exceeding 2 percent of China’s gross domestic product.

Shares of ZTE rose 2.3 percent to HK$12.70 as of 1:19 p.m. in Hong Kong trading. The stock has dropped 2.8 percent this year.

ZTE said it will build an “ultra-large bandwidth, high capacity” network for Alibaba.

The contract makes ZTE a “long-term partner” for Alibaba’s broadband network construction and deployment, ZTE said in the statement. John Spelich, a spokesman for Alibaba, said he couldn’t provide additional comment on the statement.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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