ZTE Corp., China's second-biggest phone network equipment maker, said it won about 20 percent of China Telecommunications Corp.'s orders for new base stations and that reports about the contracts were misleading.

A newspaper report that ZTE had won 14 percent of the contracts counts both new base stations and replacement equipment, Li Zhengyou, the head of ZTE's code division multiple access, or CDMA, business, said in a phone interview today. China Telecom isn't paying for replacement gear, he said.

ZTE has started bidding for more CDMA contracts to supply China Telecommunications, Li said from the company's head office in Shenzhen. ZTE is ``optimistic'' it will win a larger share of these orders, he said

ZTE fell 9.7 percent in Hong Kong trading today and 10 percent yesterday after the China Securities Journal said yesterday that the company had won 14 percent of the orders for equipment in 81 cities. ZTE won fewer contracts than expected, said analysts including DBS Vickers Ltd.'s Steven Liu.

ZTE is competing with Huawei Technologies Co., Alcatel- Lucent, Nortel Networks Corp. and Motorola Inc. to supply China Telecommunications, which has announced plans to spend 80 billion yuan ($11.7 billion) over three years expanding the CDMA business it's buying from rival China Unicom Ltd.

Huawei won 30 percent of CDMA orders for the 81 Chinese cities, while Alcatel-Lucent won 20 percent, Motorola 18 percent, and Nortel 17 percent, the Securities Journal said, citing a person it didn't identify.

``Huawei and other equipment makers are all cutting prices to get into the Chinese market for CDMA, which ZTE used to have the biggest share of,'' said DBS's Liu, a telecommunications analyst in Hong Kong who recommends investors sell shares of ZTE.

Source:Bloomberg