ZTE's net profit drops as it spends more

ZTE Corp posted a drop in net profit in the third quarter with more spending on marketing and research, China’s biggest listed telecommunications equipment maker said on Thursday.

ZTE plans to spend about 2.5 to 2.6 billion yuan (US$382.3 million) to increase its stake in a microelectronics subsidiary, the Shenzhen-listed firm said in a statement. 

In the third quarter, ZTE posted a net profit of 855 million yuan, 69 percent down from a year ago. Revenue reached 269.3 billion yuan, a 37.18 percent growth year on year. 

In the first nine months, ZTE’s research spending hit 10.8 billion yuan, a 15 percent growth from a year ago and accounting for 14.6 percent of total revenue.

ZTE and Huawei are among the world’s top four 5G gear suppliers. Both have invested heavily in 5G-related development. 

By September, ZTE had obtained 55 5G contracts globally, the company said in a statement to the Shenzhen Stock Exchange.

It plans to use shares to acquire stakes in ZTE Microelectronics with a deal valued at between 2.54 billion to 2.64 billion yuan. After the deal, ZTE will have a 100-percent stake in the firm.