ZTE Corp., China’s second-biggest maker of phone equipment, said it expects to sustain “stable growth” in overseas sales as demand from emerging-market carriers shields the company from the global economic recession.

“There is a lot of scope for us to raise overseas sales,” Xu Ming, vice-president of wireless business unit, said in an interview in Macau yesterday.

Lower prices and increased product-research spending have allowed ZTE to win business in Africa, South Asia and Latin America against competition from rivals including Ericsson AG and Alcatel-Lucent SA. The Chinese company is gaining domestic sales as carriers in the world’s biggest telecommunications market raise network investments to start high-speed wireless services.

“The company’s domestic sales growth could be even faster than the increase in overseas sales,” said Li Zhiwu, an analyst at BOCOM International Holdings Co. in Hong Kong. Chinese phone carriers may boost capital spending 13 percent to 260 billion yuan ($38 billion) next year as investment in third-generation wireless networks jumps, said Li, who rates ZTE’s shares “buy.”

China Mobile Ltd., the world’s biggest phone company by users, plans to expand a commercial trial for its high-speed service to 38 cities by June from 10 at present. China Unicom (Hong Kong) Ltd. said it will raise capital spending in its wireless business to a combined 100 billion yuan in 2009 and 2010 to offer 3G services.

At least 80 billion yuan will be invested in China Telecom Corp.’s mobile-phone network over three years, Chairman Wang Xiaochu said in July. The country’s biggest fixed-line carrier and its parent, China Telecommunications Corp., last month bought mobile-phone assets from China Unicom as part of a government-led reorganization of the telecommunications industry.

Won Contract

ZTE this week said it won a 1.33 billion yuan contract from China Telecommunications Corp. to supply wireless phone gear based on code-division multiple access technology. ZTE last year won a 2.37 billion yuan contract to supply 3G equipment to China Mobile Communications Corp., China Mobile’s parent.

ZTE’s overseas sales rose 59 percent to 12.7 billion yuan in the first half of the year, accounting for 64 percent of revenue, driving a 21 percent increase in profit to 557 million yuan, the company reported in August. The company last month said third- quarter profit jumped 81 percent to 258.3 million yuan.

“We haven’t seen a big impact from the financial crisis on the operators’ business,” Xu said, while attending the Mobile Asia Congress conference in Macau.

Source:Bloomberg