ZTE reverses course, will still try to crack U.S. infrastructure market

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ZTE, in a stark reversal, said it will not abandon plans to try and enter the U.S. network infrastructure market with Tier 1 carriers, according to a senior executive.

"Although we have been blocked by the U.S. government, we just can't give up breaking into the U.S. market because its size is huge and per-capita spending is high," Richard Ye, senior director of wireless-product operations, told Dow Jones Newswires. Ye's comments appear to reverse what ZTE Chairman Hou Weigui said in an interview with Dow Jones in late October, in which he indicatd that the political obstacles to Chinese vendors in the United States were too difficult to overcome.

In that interview Hou said that ZTE won't seek equipment deals with companies such as Sprint Nextel (NYSE:S), AT&T (NYSE:T) and others. "Putting too much effort into this has no use. Last year we received a lesson" when the U.S. government essentially blocked ZTE (and Huawei) from winning an equipment deal with Sprint, Hou said. He added that ZTE has a growing business providing mobile devices to U.S. operators. and will focus on that.

However, Ye said that ZTE cannot just "walk away from this important market." He said ZTE is still in discussions with all of the Tier 1 carriers, including Verizon Wireless (NYSE:VZ) and T-Mobile USA. Overall, Ye said ZTE expects global revenue from equipment to continue growing at a double-digit rate next year as operators upgrade to LTE.

U.S. lawmakers have criticized both ZTE and its larger rival Huawei, arguing that they represent a security risk to U.S. infrastructure. The companies, which have extensive business in Europe and Asia, have said the charges are unfounded. Last month the U.S. Commerce Department decided to block Huawei from participating in the construction of a nationwide, interoperable public-safety LTE network. The government said the decision was based on national security and declined to elaborate. Huawei has since been pushing back strongly against the decision.

For more:
- see this Dow Jones Newswires article

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