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ZTE May Miss Out on India Network Orders, Nomura Says

May 4 (Bloomberg) -- 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.

ZTE is “seeking further confirmation” about India’s telecommunication security policies, the Shenzhen, south China-based company said in an e-mail statement. ZTE said it adheres “strictly” to Indian law and government guidelines.

Phone carriers in India must get government security clearance before importing equipment under rules introduced in December, according to Nomura.

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

ZTE rose 2.7 percent to HK$29.10 in Hong Kong trading, and the company’s Shenzhen-traded shares fell 1.1 percent to 36.85 yuan.

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

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

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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