ZTE loses Italy deal even as US restrictions begin to ease

Bloomberg

The Trump administration is letting ZTE Corp. resume some business activities while the US weighs an end to a seven-year ban on the Chinese telecommunications company.
The easing of restrictions didn’t come soon enough for ZTE’s bid to win a contract in Italy to supply wireless equipment to Wind Tre SpA. ZTE lost the deal because it’s barred from buying US technology, and Ericsson AB won the $700 million contract instead, people with knowledge of the matter said, asking not to be identified because it hasn’t been announced.
The mixture of good and bad news is just the latest chapter in the saga of ZTE, which has seen its prospects and stock price rise and fall in the past few months over access to technology it needs to sell telecoms gear across the globe. The US imposed the ban against the Chinese company earlier this year, saying that it failed to comply with punitive measures imposed after allegations of lying about equipment sold to Iran and North Korea.
Still, the administration of US President Donald Trump has sought to ease restrictions on ZTE, which has become a bargaining chip amid rising trade tensions with China.
The Shenzhen-based company appointed a new chairman as part of its agreement to clean house and pay a record $1.4 billion fine to get back into business. The latest ZTE authorisation by the Commerce Department’s Bureau of Industry and Security is valid from July 2 until August 1.
ZTE is expected to be in compliance with US demands by August 1, a person familiar with the matter said.
Representatives for Ericsson and Wind Tre declined to comment on the Italy deal, which ZTE had originally won two years ago. Now, the Swedish telecommunications equipment maker has the multiyear accord to supply base stations for about 60 percent of Wind Tre’s Italian mobile networks.
The latest US authorisation permits China’s No. 2 maker of telecoms gear to support existing networks or equipment under contracts signed on or before April 15, when the US blocked companies from selling components to ZTE on the sanctions violations. The ban had forced ZTE to announce it was halting major operations.
Trump reversed course in May, saying he was reconsidering penalties on ZTE as a personal favour to Chinese President Xi. The Trump administration announced it would allow the company to stay in business after paying the fine, changing its management and providing “high-level security guarantees.”

ZTE names Xu as CEO
Bloomberg

ZTE Corp. has appointed a 20-year veteran to lead the Chinese telecoms firm as the US weighs an end to a seven-year ban.
Board members unanimously voted in Xu Ziyang, who was most recently in charge of the firm’s wireless-network products, to replace Zhao Xianming,
according to a Hong Kong stock exchange filing. Wang Xiyu, Gu Junying and Li Ying, who was also selected as chief financial officer, were named vice presidents.
New leadership was one of several conditions in an agreement struck between ZTE and the US to end a ban on technology purchases that crippled its business. The Chinese company also agreed to pay a steep fine for violating sanctions on exports to Iran and North Korea, then lying about it.
The Trump administration is already easing some restrictions on ZTE. The shares have lost about half their value in Hong Kong.