With both Africa and Asia on the cusp of a digital renaissance, Telecom Review Asia Pacific secured an exclusive interview with ZTE’s SVP, President of International Sales Mr. Xiao Ming to discuss the evolution of 5G within these two very distinct regions as well as the significance of investing its global revenue into R&D in a post-pandemic world.
How different is ZTE’s strategy for 5G development in Africa and Asia, taking into consideration both these regions’ diverse socio-economic landscape?
The economic and social development varies in different regions around the world, and the development of 5G is unbalanced. According to GSMA statistics, by the end of Q2 2020, a total of 87 operators have released 5G commercial services in 39 markets, and another 84 operators have announced plans to deploy 5G in the future. Among them, 5G has developed rapidly in Asia, Europe, the Middle East and North America.
5G development of Asia is leading the world. According to GSMA’s forecast, the number of 5G connections worldwide is expected to reach 1.7 billion in 2025, with the Asia-Pacific region accounting for the largest proportion. 5G development in Asia is diversified. On one hand, some leading Asian countries top the world in terms of 5G development and lead 5G network deployment and 2C/2B market, such as China, South Korea, Australia, Japan, Thailand and Singapore. On the other hand, a large number of Asian countries with emerging economies are also actively engaged in 5G networks planning and deploying.
In the wave of 5G construction in Asia, ZTE has accumulated rich experience. Up to now, we have deployed commercial 5G networks in more than 40 countries around the world and have mature 5G commercial capability and end-to-end 5G network products. In the Asian market, we will share our experience in commercial 5G deployment, and provide leading 5G technologies and a full range of products, covering 32/64-channel Massive MIMO AAU, 2/4/8-channel RRU and digital indoor distribution QCell, to facilitate the rapid deployment of 5G networks with extremely cost-effective scenarios.
In Africa, 5G is still in its initial stage, 4G networks play a leading role in most of Africa, and network investment mainly focuses on 4G capacity expansion and construction. The government and operators are beginning to plan 5G spectrum and 5G network construction. Some leading operators have been actively involved in promoting the acquisition of 5G frequency bands and preparing for large-scale commercial deployment. We are delighted to see some leading operators have been actively involved in promoting the acquisition of 5G frequency bands and preparing for large-scale commercial deployment.
The South African government opened the temporary spectrum license of 3.5 G in April this year and is expected to complete the formal spectrum auction this year. In other countries, such as Nigeria, Uganda, and Kenya, 5G tests are also under way. Some countries in North Africa have also started trial commercial use. The development of the 5G industry will bring unlimited opportunities in the next 3 to 5 years. We believe that with the accelerated commercial use of 5G SA, the 5G ecosystem will gradually mature. More and more African countries will seize the window of rapid 5G development. We will focus on the coordinated development of 4G and 5G, solve the network coverage and digital connection in Africa, and the layout of 5G market.
2) Clearly the pandemic has delayed much of ZTE’s business operations globally, yet the company has been quick to bounce back. How has ZTE managed to pull off this incredible feat in just a few months?
The pandemic has brought unprecedented changes to the world and almost all aspects of African telecommunications. During the surge in communication demand, ZTE has been communicating with our operator partners to maintain network operation and security. Literally, ZTE was seriously affected at the beginning of the pandemic. However, ZTE recovered quickly. Through our in-depth digital transformation and continuous investment in R&D and market segments, we have achieved nearly 6% revenue growth and a significant growth of 26% in net profit. Our R&D investment amounted to 6637 million RMB, accounting for 14.06% of the first half of this year.
After the outbreak of the Covid-19, our top priority was the safety of our employees and customers. We require all employees to fully comply with the local government's requirements for preventing the spread of the virus, such as self-isolation, working from home, and online marketing activities. ZTE itself is also accelerating digital transformation to cope with various difficulties caused by the pandemic, as well as promote and implement digital office, digital operation, digital research and development, digital business, etc.
3) You mentioned previously that “Africa is the continent with the highest economic vitality in the world.” Could the same be said for Asia or are there other factors that need to be considered?
According to United Nations projections, the world population will increase to 11 billion by the end of this century. Among the extra 4 billion people, 3 billion will be located in Africa and 1 billion in Asia. At that time, over 80% of the world population will live in these two regions. With the rise of consumption power and economic strength in these regions, Africa and Asia will become the most important commercial markets in the world.
Thanks to the demographic dividend and the rapid spread of smart phones in Africa, Africa's mobile Internet users are growing rapidly, and new services such as mobile payment, instant communications, online streaming media, and short video services are increasing. This is a critical period for digital transformation and digital economy development. In the next few years, Africa is expected to make use of digital technology to improve people’s living standards and promote economic development.
Meanwhile, Asia’s economy is also full of vitality and the economy is developing rapidly. There are many countries in Asia whose 5G network construction is in a leading position in the world, such as South Korea, China, Japan, etc. We will deploy the most advanced 5G SA network in Asia to meet the needs of the industrial Internet.
4) Covid-19 has inadvertently accelerated the digital transformation we have been talking about for years, what is ZTE doing for its customers that allows them to keep up with these unexpected circumstances?
The pandemic reshaped people's production and life, making digital transformation in all walks of life imperative. Telecom has helped us to navigate the COVID-19 crisis. This unplanned and unexpected disruption has shown us that there are many things we can do, like working from home, video conference, which were unthinkable just a few months ago.
During the pandemic, we worked together with our customers to ensure the security and reliability of the network. We have formulated various measures to ensure that the network can cope with the rapid growth of traffic and connection requirements of individuals, medical institutions, enterprises, and education. The traffic surge has prompted operators and ZTE to launch short- and long-term solutions to meet these new demands.
5) What plans does ZTE have for future operations in terms of investing in R&D, seeing that this market helped pull the company out of an economic whirlpool during the pandemic?
R&D is an innovation booster for enterprises. Facing the challenges brought by COVID-19, we will continue to increase our R&D investment, deepen our own digital and intelligent transformation, improve R&D and operational efficiency, and make full use of the efficient and collaborative advantages brought by digital transformation.
ZTE upholds it as a core development strategy to insist on 5G invest. Now, we have the capability to give complete 5G end-to-end solutions.
By virtue of leading technologies, products, and solutions in wireless, core network, bearer, chip, terminal, and industrial applications, we are accelerating the large-scale commercial deployment of 5G worldwide. At the same time, we will continue to explore 5G industry applications, bring 5G technology to various industries, and maximize the value of 5G.
In China, the three major operators, China Mobile, China Telecom, and China Unicom, have started 5G network construction with the goal of realizing the commercialization of 5G SA networks. We have participated in the 5G SA network construction as a main partner. At the same time, in order to cope with the ever-changing scene needs in digital transformation, ZTE has launched a precision cloud network strategy, including distributed precision cloud on demand and deterministic precision network that the allows the network to move with the cloud, helping operators control the cloud and network ecology.
In Africa, we are committed to investing more value, credibility, and cost-effective ICT technologies in operators and vertical industries, including 4G, 5G, smart equipment, cloud, and end-to-end solutions, to solve Africa's network coverage and digital connectivity. We remain passionately committed to achieving an all-digital Africa.