UPDATED: ZTE sees growth ahead in Germany in managed services

NICE, France--ZTE has high hopes that it will grow in the German market in the years ahead, especially in managed services, according to a ZTE executive. Some of that growth could potentially come from the proposed merger between KPN's German unit E-Plus with Telefónica's O2 Germany. However, the deal is not yet final and needs to be approved by European Commission regulators.

ZTE is banking on its performance so far with managing the E-Plus network to support its ambitions in the German market. According to Xu Ziyang, managing director of ZTE Services Deutschland, its managed services contract with E-Plus will serve as a major proof of concept for the Chinese vendor not only in Germany but also in other European markets.

Speaking to FierceWireless:Europe at the TM Forum Live conference in Nice, Xu said ZTE has worked with E-Plus for over five years, first as its network infrastructure provider and now also as its managed services partner, and in that time has enabled the operator to move from fourth to third position in the market in terms of customer network experience and numbers of subscribers.

E-Plus also recently launched LTE services in limited areas, and Xu said it was a clever move by the operator to launch services this year rather than at the same time as its bigger rivals Deutsche Telekom and Vodafone Germany, and also O2 Germany.

"E-Plus launched at a perfect time," said Xu, who noted that E-Plus has typically focused on younger and more cost-sensitive subscribers, and is not offering a separate tariff for LTE services.

For ZTE, E-Plus is a major strategic and reference partner that will allow it to demonstrate its expertise as an outsourced managed network services provider to other markets. In Germany, around 900 ZTE employees work on the E-Plus contract. While E-Plus remains its focus for now, Xu said the vendor sees four or five potential opportunities in Europe, including in Belgium, Spain and Hungary.

ZTE sees itself as a market challenger, and thus targets challenger operators initially, such as E-Plus, commented Xu. He also believes that mobile virtual network operators (MVNOs) present a good opportunity for the vendor, which can support them on the network side and enable them to focus on end user services.

Once challenger and MVNO opportunities are secured, Xu said ZTE could then become of increased interest to larger tier 1 and tier 2 operators that see how the vendor has helped operators to become more efficient through outsourcing.

In terms of ZTE group revenue, Xu said 50 per cent comes from China while the rest comes from its overseas operations. Europe is grouped into what the vendor calls "division 5" along with North and South America, and this division currently generates around 10 per cent of overall revenue.

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Article updated June 3 to reflect ZTE's position on potential growth in the German market.