ZTE to expand digital television service offering in Pakistan

BEIJING — China's ZTE is expanding its partnership in Pakistan to extend digital television services into more regions of the country, including in remote mountainous areas, Zhang Zhenhui, executive vice president at the company, told CNBC.

The Shenzhen-based tech and telecom company will sign the agreement on Sunday at China's Belt and Road Forum, a two-day meeting on the country's major foreign policy initiative.

"This is a project with significant importance, as it provides telecommunication services to many Pakistani people, including ones that live in rural and remote areas," Zhang said. "This is a key strategic project by the two governments, and ZTE serves as the bond between the two nations."

A logo sits illuminated outside the ZTE pavilion on the opening day of the World Mobile Congress at the Fira Gran Via Complex on February 22, 2016 in Barcelona, Spain.
David Ramos | Getty Images

China's ambitious "One Belt, One Road" policy is a plan that aims to connect Asia, Europe, the Middle East and Africa with a vast logistics and transport network. It's set to use roads, ports, railway tracks, pipelines, airports, electric grids and even fiber optic lines. If successful, it would allow China to increase its global influence and find a way to find further growth as the domestic economy slows.

For companies like ZTE, this means a major opportunity to continue expanding abroad, especially with the backing of the Chinese government.

"We believe the policy will greatly support the company's next phase of international expansion," Zhang said.

ZTE already operates in more than 160 countries, and nearly half of the firm's revenues come from its international business. Pakistan has long been an important market for ZTE — the company has worked with local partners to build and upgrade the country's telecoms' 2G, 3G and 4G networks, and opened a research and development center back in 2006.

Pakistan is also an important part of China's "One Belt, One Road" strategy: The world's second-largest economy has already launched a collection of infrastructure projects there worth $46 billion, named the China-Pakistan Economic Corridor.

Zhang said ZTE is optimistic about its 2017 business prospects after posting a strong first quarter with a nearly 28 percent jump in net profit, and that the company will continue to invest heavily in developing 5G networks, with the aim to roll out by 2020.

"5G will be ZTE's champion product … we will be the leader," Zhang said.

The strong start to the year is a sign the company is rebounding after pleading guilty and paying in March around $1 billion in fines to the U.S. government to settle allegations that it violated U.S. laws on selling American technology to Iran. The penalty payment dented earnings — the company posted a 2.36 billion yuan net loss for 2016.

Although the U.S. hasn't officially signed on to China's initiative, a delegation is participating in the Beijing meeting. And U.S.-China trade relations continue to hang in the balance, though officials and business leaders on both sides have worked to maintain optimism about continuing a long relationship.

ZTE's Zhang echoed those sentiments: "I believe in many years from now, the China and U.S. economies will embrace even deeper ties and cooperation."

China's "One Belt, One Road" scheme involves 65 countries, which together account for one-third of global GDP and 60 percent of the world's population, according to Oxford Economics.