ZTE : 2022 FIRST 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 ʕጳஷৃٰ΅Ϟࠢʮ̡

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

(Stock Code: 763)

2022 FIRST QUARTERLY REPORT

The Company and all the members of the Board of Directors confirm that all the information contained in this information disclosure is true, accurate and complete and that there is no false and misleading statement or material omission in this information disclosure.

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).

²1 IMPORTANT

• 1.1 The Board of Directors, Supervisory Committee and the Directors, Supervisors and senior management of ZTE Corporation ("ZTE" or the "Company") warrant that the contents of this quarterly report are true, accurate and complete without false information, misleading statements or material omissions, and collectively and individually accept responsibility therefor.

• 1.2 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.

• 1.3 This quarterly report has been considered and approved at the Second Meeting of the Ninth Session of the Board of Directors of the Company.

1.4 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.

1.5 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").

1.6 China Securities Journal, Securities Times, Shanghai Securities News andhttp://www.cninfo.com.cnare designated media for the Company's information disclosure. Investors are advised to be aware of investment risks involved.

²2 MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS

2.1 Major Accounting Data and Financial Indicators of the Company and its subsidiaries

(the "Group")

Statement on retrospective adjustments to or restatement of accounting data for the previous year by the Company because of changes in accounting policies or for the rectification of accounting errors

½ Applicable √ N/A

Item

The reporting period (Three months ended 31 March 2022)

Same period last year (Three months ended 31 March 2021)Increase/decrease for the reporting period compared with the same period last year

Operating revenue

(RMB in thousands)

27,930,271

26,241,647 6.43%

Net profit attributable to holders of ordinary shares of the listed company (RMB in thousands) Net profit after extraordinary items attributable to holders of ordinary shares of the listed company (RMB in thousands)

2,216,659

2,181,649 1.60%

Net cash flows from operating activities (RMB in thousands) Basic earnings per share

1,952,471 1,187,207

899,213 117.13%

2,388,242

(50.29%)

(RMB/share) Note 1

Diluted earnings per share

(RMB/share) Note 2

Weighted average return on net assets (%)

0.47 0.47 4.21%

0.47 0.47

--

Decreased by 0.69

• 4.90% percentage points

As at the end of the reporting period

As at the end of last yearChange as at the end of the reporting period

Item

(31 March 2022)

(31 December compared with the

2021)end of last year

Total assets (RMB in thousands) Owners' equity attributable to holders of ordinary shares of the listed company

179,243,960

168,763,425 6.21%

(RMB in thousands) Total share capital

(thousand shares) Note 3

53,736,805 4,733,877

51,482,089 4.38%

4,730,796 0.07%

Note 1: Basic earnings per share for the three months ended 31 March 2022 and three months ended

31 March 2021 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 2: As the share options granted by the Company have given rise to 950,000 and 17,779,000 potentially dilutive ordinary shares for the three months ended 31 March 2022 and three months ended 31 March 2021, respectively, dilutive earnings per share for the three months ended 31 March 2022 and the same period last year have been calculated on the basis of basic earnings per share taking into account the said factor.

Note 3: The total share capital of the Company increased from 4,730,795,972 shares to 4,733,876,968 shares following the exercise of a total of 3,020,362 A share options by the participants under the 2017 Share Option Incentive Scheme and 60,634 A share options by the participants under the initial grant of the 2020 Share Option Incentive Scheme during the reporting period.

2.2 Extraordinary gains or losses items and amounts

Unit: RMB in thousands

Amount

Three months endedExtraordinary items

31 March 2022

Investment gain from disposal of long-term equity

investment 3,280 Gain/loss from fair-value change of derivative financial assets and derivative financial liabilities held and investment gain from disposal of derivative financial assets and derivative financial liabilities, excluding the effective value protection hedge business relating to the

Company's ordinary business Note 2 60,888 Write-back of provision for individually tested receivable

impairment 30,728 Other gains other than income from software VAT rebate and income from handling charge for withholding

personal tax 32,541 Net of other non-operating income and expenditure other

than the above 18,135 Other gains/losses falling under the definition of

extraordinary gain/loss 164,445

Less: Effect of income tax 46,503

Effect of non-controlling interest (after tax)

(674)Total

264,188

Note 1: The Group recongised extraordinary items of gain or loss in accordance with provisions under the "Explanatory Announcement No. 1 for Information Disclosure by Public Issuer of Securities - Extraordinary Items" (CSRC Announcement [2008] No. 43). The following items, which are set out in the provisions as extraordinary items, have been categorised as recurring items:

Amount for the three months ended 31 March 2022

(RMB in

Item	thousands)	Reasons
Income from VAT rebate for software	520,984	In compliance with
products	national policies
and occurring on
an ongoing basis
Income from handling charge for	22,787	In compliance with
withholding personal tax	national policies
and occurring on
an ongoing basis
Investment gain and gain/loss from fair-
value change of Shenzhen ZTE Capital
Management Company Limited ("ZTE
Capital")

(201,100) Business with the

scope of operation

of ZTE Capital

Note 2: The Company has entered into a series of forward exchange contracts. Subject to compliance with conditions for hedge accounting, the Company has elected not to apply hedge accounting. The gain/loss of hedging instruments was included in recurring gain/loss to the extent of the exchange gain/loss of the hedged items. The effective value protection hedge relating to the Company's ordinary business operations included in recurring gain/loss for the reporting period amounted to RMB32,953,000.

2.3 Substantial changes in key financial data and financial indicators of the Company and the reasons thereof

Unit: RMB in thousands

Balance sheet

Item

31 March 2022

31 December 2021

Change Analysis of reasons for changes

Receivable financing

3,535,709

5,196,458

(31.96%) Attributable mainly to the increase in unexpired bills discounting for the period

Derivative financial liabilities

44,884

27,729

61.87%Attributable mainly to the increase in loss on fair-value remeasurement at the end of the period of certain derivative investments for the period

Non-current liabilities due within one year

2,912,863

977,336

198.04% Attributable mainly to the increase in long-term borrowings due within one year for the period