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MarketScreener Homepage  >  Equities  >  SHENZHEN STOCK EXCHANGE  >  ZTE Corporation    000063   CNE000000TK5

ZTE CORPORATION

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Huawei to invest $3.1 billion in Italy but calls for fair policy on 5G: country CEO

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07/15/2019 | 10:30am EDT
A Huawei signage is pictured at their store at Vina del Mar

MILAN (Reuters) - China's Huawei Technologies said it would invest $3.1 billion in Italy over the next three years, as the Chinese telecoms giant called on Rome to ensure the "transparent, efficient and fair" use of its 'golden power' on 5G network development.

Speaking at an event in Milan on Monday, the chief executive of the telecoms giant's Italian unit, Thomas Miao, said Italy's golden power - which allows the state to intervene in the private sector in the defense of national security - should be extended to all vendors in the European Union.

Italy recently beefed up the measure due partly to concerns over the potential involvement of Huawei and fellow Chinese company ZTE Corp in the development of 5G networks, a government source said on Friday.

Miao said Huawei would add 1,000 jobs in the country over the next three years.

He also confirmed the Chinese company would cut 1,000 jobs in the United States. He said if the company is kept on a blacklist in August by Washington, it has "a plan B" to guarantee supplies of components.

The United States has lobbied Italy and other European allies to avoid Huawei equipment and also to closely scrutinize ZTE, alleging the vendors could pose a security risk. Both companies have strongly denied any such risk.

DECREE

Italy's ruling coalition, forged a year ago between the anti-establishment 5-Star Movement and the far-right League, endorsed China's ambitious "Belt and Road" infrastructure plan in March, becoming the first major Western power to back the initiative to help revive the struggling Italian economy.

The rapprochement has angered Washington and alarmed some European Union allies, who fear it could see Beijing gain access to sensitive technologies.

In a move to soothe the U.S. worries, Rome passed a decree last week strengthening its powers in infrastructure projects that involve the rollout of the country's 5G telecoms network.

The decree must be approved by parliament in the next 60 days or it will expire.

Huawei Italia's Miao called for the 5G golden powers to be applied not only to non-EU companies but also to all EU vendors.

"It is very important that the 5G technology is neutral," Miao said adding that the new norms should apply "to all players to make sure that from day one we have a safe and reliable infrastructure".

He also asked the government to speed up its approval procedures.

"In the worst case scenario up to 165 days may be needed to get approval for deals regarding 5G," Miao told reporters, adding this was too long a period of time.

Telecom Italia and Vodafone Italia are expected to finalize soon a deal to jointly roll out 5G infrastructure in Italy. Both companies were waiting for the decree to decide how to deal with Chinese partners such as Huawei.

Miao said that, in the meantime, the company "is doing business as usual" with its partners in Italy.

(Reporting by Elvira Pollina; Writing by Giulio Piovaccari and Giselda Vagnoni; Editing by Jan Harvey and Emelia Sithole-Matarise)

By Elvira Pollina

Stocks mentioned in the article
ChangeLast1st jan.
TELECOM ITALIA 2.03% 0.4563 End-of-day quote.-7.47%
VODAFONE GROUP PLC 0.69% 152.18 Delayed Quote.-1.28%
ZTE CORPORATION End-of-day quote.
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Financials (CNY)
Sales 2019 95 741 M
EBIT 2019 6 317 M
Net income 2019 4 552 M
Debt 2019 1 194 M
Yield 2019 0,80%
P/E ratio 2019 28,2x
P/E ratio 2020 21,9x
EV / Sales2019 1,24x
EV / Sales2020 1,05x
Capitalization 118 B
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Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 33,20  CNY
Last Close Price 30,13  CNY
Spread / Highest target 49,4%
Spread / Average Target 10,2%
Spread / Lowest Target -19,3%
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NameTitle
Ziyang Xu Chief Executive Officer & Executive Director
Da Xiong Xie Chairman-Supervisory Board
Zixue Li Chairman
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