2012 Annual Report - ZTE

ANNUAL REPORT 2012the domestic market, and delayed progress of certain international projects, we experienced a decline in overalloperating revenue as compared to 2011. Meanwhile, the Group’s net profit attributable to shareholders of thelisted company decreased by a relatively significant margin, reflecting a decline in overall gross profit margin ascompared to 2011, as the results of a larger number of low-margin contracts in Africa, South America, Asia andthe domestic market recognized for 2012. The Group’s operating revenue for 2012 amounted to RMB84.22 billion,representing a year-on-year decline of 2.4%, while net profit attributable to shareholders of the listed companydecreased 237.9% to RMB-2.84 billion. Basic earnings per share amounted to RMB-0.83.1) By marketThe domestic marketFor the year under review, the Group reported operating revenue of RMB39.56 billion from the domestic market,accounting for 47.0% of the Group’s overall operating revenue. The Group worked in close tandem with thetechnological choices and network construction plans of carriers to capitalise on opportunities in the domesticmarket presented by large-scale 3G construction, the start of the construction of 4G commercial experimentalnetworks and the Broadband China strategy, while consolidating its market shares through enhancements of itsproduct competitiveness and the introduction of new technologies and new products, etc.The international marketFor the year under review, the Group reported operating revenue of RMB44.66 billion from the international market,accounting for 53.0% of the Group’s overall operating revenue. The Group continued to focus on in-depth businessdevelopment and operation in major populous nations and with mainstream global carriers and to enhance thecapabilities for long-term sustainable development. Meanwhile, the Group was also vigorously establishing itspresence in the market for government and enterprise networks, leveraging opportunities presented by in-depthdevelopment in informatisation by the government and enterprise customers.2) By productFor the year under review, the Group reported operating revenue of RMB41.60 billion for carriers’ networks.Operating revenue for terminals amounted to RMB25.84 billion. Operating revenue for telecommunication softwaresystems, services and other products amounted to RMB16.78 billion.Carriers’ networksIn connection with wireless products, the Group reinforced strategic cooperation with its existing customers ontraditional 2G/3G products such as GSM/UMTS/CDMA, etc, while vigorously exploring new market niches. Inrespect of commercial construction relating to 4G products, we continued to enhance partnerships with mainstreamglobal carriers on all fronts through FDD-LTE products, while maintaining our global leadership in TD-LTE products,for which commercial contracts were secured in India, the Middle East and Japan, etc. Against intense competitionin the global marketplace, the Group strengthened its in-depth operation of wireless products and achievedsustainable development for wireless products, while assuring compliance with network performance benchmarksand delivery schedules.In connection with wireline and optical communications products, although there was a decline in operatingrevenue from wireline switch and access products, the Group reported stable growth in optical communicationsproducts by continuing to invest in the research and development of new technologies and actively matching itssolutions with carriers’ network construction, amid a rapidly developing broadband market and the constructionof supporting facilities for the Mobile Internet.27