ZTE : ● 2019 THIRD QUARTERLY REPORT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

ZTE CORPORATION

中 興 通 訊 股 份 有 限 公 司

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 763)

2019 THIRD QUARTERLY REPORT

This announcement is published simultaneously in the Mainland in accordance with the Rules Governing Listing of Stocks on The Shenzhen Stock Exchange and in Hong Kong in accordance with the disclosure obligations under Rule 13.09(2) and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the inside information provisions set out in Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

§1 IMPORTANT

1. The Board of Directors, Supervisory Committee and the Directors, Supervisors and senior management of ZTE Corporation ("ZTE" or the "Company") confirm that there are no false information and misleading statements in this quarterly report nor any material omissions therefrom, and collectively and individually accept responsibility for the truthfulness, accuracy and completeness of its contents.
2. There are no Directors, Supervisors and senior management who do not warrant or who dispute the truthfulness, accuracy and completeness of the contents of this quarterly report.
3. This quarterly report was considered and approved at the Tenth Meeting of the Eighth Session of the Board of Directors of the Company.

- 1 -

1. The financial statements contained in this quarterly report are unaudited. The financial information contained in this quarterly report has been prepared in accordance with PRC Accounting Standards for Business Enterprises ("PRC ASBEs").
2. Mr. Li Zixue, Chairman of the Company, Ms. Li Ying, Chief Financial Officer of the Company and Mr. Xu Jianrui, Head of Finance Division of the Company, hereby declare that they warrant the truthfulness, accuracy and completeness of the financial statements contained in this quarterly report.
3. China Securities Journal, Securities Times, Shanghai Securities News and http://www.cninfo.com.cn are designated media for the Company's information disclosure. Investors are advised to be aware of the investment risks involved.

§2 CORPORATE INFORMATION

2.1 Major accounting data and financial indicators

2.1.1 Major Accounting Data and Financial Indicators of the Company and its subsidiaries (the "Group")

			Change as at
			the end of the
	As at the end of the	As at the end of	reporting period
	reporting period	last year	compared with the
Item	(30 September 2019)	(31 December 2018)	end of last year
Total assets
(RMB in thousands)	147,159,353	129,350,749	13.77%
Owners' equity
attributable to holders of
ordinary shares of the
listed company
(RMB in thousands)	27,766,072	22,897,576	21.26%
Total share capital
(thousand shares) Note 1	4,225,959	4,192,672	0.79%
Net assets per share
attributable to holders of
ordinary shares of the
listed company
(RMB/share)	6.57	5.46	20.33%

- 2 -

	Three		Nine
	months ended	Change compared	months ended	Change compared
	30 September	with the same	30 September	with the same
Item	2019	period last year	2019	period last year
Operating revenue (RMB in thousands)	19,631,479	1.55%	64,240,698	9.32%
Net profit attributable to holders of
ordinary shares of the listed company
(RMB in thousands)	2,657,151	370.74%	4,127,850	156.86%
Net profit after extraordinary items
attributable to holders of ordinary
shares of the listed company
(RMB in thousands)	98,032	(18.61%)	710,170	131.44%
Net cash flows from operating activities
(RMB in thousands)	1,638,608	131.65%	2,905,228	128.42%
Net cash flows from operating activities
per share (RMB/share)	0.39	131.71%	0.69	128.28%
Basic earnings per share
(RMB/share) Note 2	0.63	350.00%	0.98	156.65%
Diluted earnings per share
(RMB/share) Note 3	0.63	350.00%	0.98	156.65%
		Increased by 7.61		Increased by 43.52
Weighted average return on net assets (%)	10.10%	percentage points	16.30%	percentage points
Weighted average return on net assets		Decreased by 0.34		Increased by 11.27
after extraordinary items (%)	0.22%	percentage point	2.80%	percentage points

Note 1: The total share capital of the Company had increased from 4,192,671,843 shares to 4,225,958,707 shares following the exercise of 33,286,864 A share options by participants under the 2017 Share Option Incentive Scheme during the reporting period;

Note 2: Basic earnings per share for the nine months ended 30 September 2019, three months ended 30 September 2019, nine months ended 30 September 2018 and three months ended 30 September 2018 have been calculated on the basis of the weighted average number of ordinary shares in issue as at the end of the respective periods;

Note 3: As the 2017 share options granted by the Company have given rise to 19,140,000 and 0 potentially dilutive ordinary shares for the nine months ended 30 September 2019 and nine months ended 30 September 2018, respectively, dilutive earnings per share for the nine months and three months ended 30 September 2019 and the same periods last year have been calculated on the basis of basic earnings per share taking into account the said factor.

- 3 -

Extraordinary item

Unit: RMB in thousands

	Amount
	Three	Nine
	months ended	months ended
	30 September	30 September
Extraordinary item	2019		2019
Non-operating income, other income and others	659,241		1,750,400
Gains/(Losses) from fair value change	(363,558)	(392,130)
Investment income	58,525		198,679
Add: Gains on disposal of non-current assets	2,679,902		2,662,927
Less: Other non-operating expenses	22,930		185,995
Less: Effect of income tax	451,677		605,082
Less: Effect of non-controlling interests (after tax)	384		11,119
Total	2,559,119		3,417,680

2.1.2 The amounts of net profit and shareholders' equity of the Group for the nine months ended 30 September 2019 and as at 30 September 2019 calculated in accordance with PRC ASBEs are fully consistent with those calculated under Hong Kong Financial Reporting Standards.

- 4 -

2.2 Total number of shareholders and shareholdings of top 10 shareholders and top 10 holders of shares that were not subject to lock-up of the Company as at the end of the reporting period

Total number of shareholders

As at 30 September 2019 There were 356,796 shareholders in total (comprising 356,477 holders of A shares and 319 holders of H shares).

Shareholdings of top 10 shareholders or shareholders holding 5% or above

				Number of shares as
				at the end of the	Number of shares	Number of
			Percentage of	reporting period	held subject to	shares pledged
Name of shareholders	Nature of shareholders	shareholdings	(shares)	lock-up (shares)	or frozen
1.	Zhongxingxin Telecom Company Limited	Domestic general	27.19%	1,148,849,600	-	98,667,983
	("Zhongxingxin")	corporation			-
2.	HKSCC Nominees Limited Note 1	Foreign shareholder	17.85%	754,365,584	Unknown
3.	Central Huijin Asset Management Co. Ltd.	State-owned corporation	1.24%	52,519,600	-	Nil
4.	Hong Kong Securities Clearing Company	Overseas corporation	0.99%	41,713,722	-	Nil
	Limited Note 2				-
5.	Hunan Nantian (Group) Co., Ltd	State-owned corporation	0.98%	41,516,065	Nil
6.	China Life Insurance Company Limited	Other	0.72%	30,473,232	-	Nil
	- Dividend - Personal Dividend
	- 005L-FH002 Shen				-
7.	Shanghai Gaoyi Asset Management	Other	0.71%	30,000,000	Nil
	Partnership (Limited Partnership)
	- Gaoyi Linshan No. 1 Yuanwang Fund				-
8.	NSSF Portfolio #108	Other	0.70%	29,600,056	Nil
9.	NSSF Portfolio #112	Other	0.57%	24,288,515	-	Nil
10.	NSSF Portfolio #101	Other	0.54%	22,630,054	-	Nil

- 5 -