ZTE to Pool USD2 Billion to Support 5G Research, Product Development
Liao Shumin
DATE:  Feb 01 2018
/ SOURCE:  Yicai
ZTE to Pool USD2 Billion to Support 5G Research, Product Development ZTE to Pool USD2 Billion to Support 5G Research, Product Development

(Yicai Global) Feb. 1 -- ZTE Corp. intends to pool CNY13 billion (USD2.1 billion) to support 5G network technology research and product development and provide the Chinese telecoms firm with additional liquidity.

The Shenzhen-based group said yesterday that it will issue at most 687 million shares to secure the funds, CNY9.1 billion of which it will use to back its plan to pump CNY42.9 billion into 5G projects over three years.

The company will work on cellular mobile communication system, core network, transmission, fixed-line broadband and network intelligence technologies.

ZTE said it will use CNY3.9 billion of proceeds to supplement its business development liquidity needs and optimize its capital structure.

The group's liabilities to assets ratio was 69 percent as of the end of September last year. If the non-public offering is successful, the company's net assets will increase, and that ratio is expected to decrease.

ZTE's stock rose 128 percent annually last year. It fell for four consecutive trading days starting Jan. 25 this year, slipping more than 17 percent. Major institutional investors sold off stakes as it dropped amid concerns its growth may slow, and the top five sellers during its plunge of more than 9 percent on Jan. 29 were all institutional investors.

After posting a loss in 2016, ZTE's net profit growth was as high as 284 percent last year, per a Securities Market Weekly analysis. As operating income only rose 5.4 percent, the net profit expansion is not suitable, according to the evaluation. The company's net profit growth will likely be 15 percent this year, analysts from institutions said.

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Keywords:   ZTE Corporation,5G R&D