ZTE non-public fundraising of 13 billion yuan was approved: preparation for 5G research and development

On the evening of August 22, ZTE announced that the application for non-public issuance of A shares was approved by the China Securities Regulatory Commission's Issuance Review Committee.

It is understood that ZTE issued a non-public offering of A shares in February 2018. The total amount of funds to be raised does not exceed 13 billion yuan (including 13 billion yuan). The net proceeds after deducting the issuance costs will be used for "5G. Technology research and product development projects for network evolution and “additional liquidity”.

Among them, the construction of "Technology Research and Product Development Project for 5G Network Evolution" includes: cellular mobile communication network technology research and product development, core network technology research and product development, transmission and bearer network technology research and product development, fixed network Broadband technology research and product development, big data and network intelligence technology research and product development.

This time, it was approved by the China Securities Regulatory Commission and has a positive and profound significance for ZTE.

First, in the second half of last year, ZTE went out of the "dark moment" in the history of the company's development for more than 30 years and returned to the track of healthy management. In the process of overcoming the crisis, all employees of ZTE Corporation showed strong cohesiveness, which made the company's production, R&D and business recover quickly. Since the fourth quarter of last year, ZTE’s performance has continued to improve. The net profit for the first quarter of this year was 863 million yuan, and the net profit for the first half of the year is expected to reach 1.2 billion to 1.8 billion yuan.

Second, through the improvement of corporate governance, ZTE regards compliance as the strategic cornerstone of the company's development, adheres to compliance management, and is committed to building an all-round integration that includes export control, anti-bribery compliance, and data protection compliance. Compliance projects to protect against risks, protect the company's sustainable development, and better protect the interests of customers, partners, shareholders, employees and stakeholders.

Third, the 5G era has arrived. As one of the four major equipment manufacturers in the world, ZTE has set a strategic goal and focused on 5G R&D. During the MWC Shanghai exhibition held in June, ZTE announced that it has won 25 5G commercial contracts worldwide and has cooperated with more than 60 operators around the world to achieve 5G cooperation. At the core patent level, IPLytics' latest 5G standard essential patent report shows that ZTE ranks third in the world with 1,424 items.

Fourth, on June 6th, China's 5G licensing will promote 5G commercial access to fast lanes in China and around the world. The three major operators plan to build 100,000 5G base stations this year, and the industry expects more actual numbers. By 2020, 5G will usher in large-scale deployment and commercialization, not only bringing consumers a high-speed networked new life, but also creating an information infrastructure that is digitally transformed.

Therefore, at this time, the non-public issuance was approved. For ZTE, it can be described as “the right place and the right place” to consolidate the achievements already made in 5G commercialization, and maintain high-intensity R&D investment to enhance the company’s core competitiveness in the 5G field. To increase the market share of mainstream markets and mainstream products, and continuously improve customer satisfaction, thereby enhancing the company's profitability.

5G licensing is not the end, but the beginning of a new round of competition. It is understood that as 5G commercials move forward, not only operators need to invest in network deployment, equipment manufacturers must continue to invest heavily, promote product and solution research and development, optimize product performance, reduce product power consumption, improve product cost performance, and create satisfaction. Solutions for all types of applications. ZTE has always insisted on investing more than 10% of its operating income in research and development. Last year, R&D investment accounted for more than 12%. This issuance will help ZTE's 5G strategy to increase its horsepower, increase investment in core equipment and chips, and build global competitiveness.