China’s Zte Eyes Tie-ups With Indian Telcos

[Honest 836]

China’s ZTE eyes tie-ups with Indian telcos

15 Jul, 2008, 0036 hrs IST, ET

SHANGHAI/SHENZHEN: Tian Ling, the celebrity Beijing 2008 Olympic torchbearer, is not a 3G technology buff. But he is upbeat about Chinese companies joining the league of global vendors, leveraging on opportunities to promote the use of 3G technology in the Olympic Games.

ZTE, ranked among the top six mobile vendors globally, claims to have grabbed over a third of the market-share of 3G handsets in China after China Mobile began commercial trails two months ago. The company, listed on the Shanghai and Honk Kong bourses, is now watching market developments in India including the likely rollout of 3G services to explore equipment supply tie-ups with prospective operators. Bharti and Vodafone have already tied-up with Apple to offer iPhone 3G, though the government is yet to award licences for 3G services.

With competition intensifying in the telecom market, ZTE is on a brand-building mission to bolster sales in India that topped $ 750 million in 2008. As a first step, it plans to directly market low-cost handsets under its own brand.

“If the timing is right, we will sell low-cost ZTE handsets directly in the Indian market by this year end. We will bank on volumes to drive growth”, said ZTE executive vice-president He Shiyou. Its R&D facility in India for developing value-added services is equipped to make handsets if required.

The Shenzhen headquartered company provides CDMA handsets to telecom operators including Communications, Tata Teleservices and BSNL. It is also in talks with GSM licensees for product offerings and network expansion, said ZTE director for international marketing Richun Wu. Vodafone already has an exclusive global tie-up with ZTE to source GSM handsets.

While these distribution channels will continue, Shiyou reckons that direct marketing of its low cost handsets makes business sense as India has emerged as the fastest growing mobile market. Over 7 million new connections are being added every month. Analysts, however, say the going may be tough as Nokia commands a 60% market-share in mobile handsets in India.

ZTE’s target is to make 50 million handsets in 2008 and deliver over 15 million of these to India. In 2007, it produced 30 million handsets, of which 10 million came to India. Its brand-building strategy also revolves around more tie-ups with mainstream CDMA and GSM network operators, selling broadband, WiMAX and IPTV solutions.