Telenor bars ZTE from contract bids

In a surprise announcement, the Scandinavian telecoms group Telenor has banned China's ZTE from bidding on all contracts. Without giving a definite reason, a Telenor spokesman said the worldwide ban would last for six months and would preclude ZTE from participating in tenders and new business opportunities until March 2009.

Dag Melgaard of Telenor indicated the company had made this decision following a breach of the company's code of conduct in relation to a procurement process.

ZTE, China's second-largest maker of telecoms equipment, has made a name for itself by successfully undercutting established telecoms suppliers, and industry observers have speculated that the company may have been too aggressive in attempting to secure contracts and breached procedures as a result.

Whilst the company has been notably successful--it announced only a few days ago a US$400 million GSM expansion contract with India's Aircel--it has also brushed up against controversy. Only last month ZTE was cleared by the Filipino government of overpricing in the cancelled US$329 million national broadband network (NBN) project.

Whilst analysts thought this ban by Telenor would have little impact on ZTE's earnings, some thought its reputation in the marketplace might suffer.

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