ZTE is planning to issue approximately $2.1 billion of private shares in order to raise additional funds meant to fuel its growing 5G ambitions, the Chinese tech giant said Wednesday. The unconventional fundraising method will see the company issue up to 687 million of its listed Class A shares to a single-digit number of investors. The firm already applied for approval of the maneuver with China's securities watchdog and will provide a more specific timeline for the placement in the coming weeks after the move has been greenlit. No pricing details of the new stock have yet been determined and are also set to be defined and disclosed in the near future, ZTE revealed.
The Chinese original equipment manufacturer has been ramping up its efforts on the 5G front in recent times, having decided to double its related investments in mid-2017. Over the course of the next three years, ZTE is looking to commit over $6.8 billion to 5G research and development, as per its previous statements. Its Wednesday filing appears to be in line with such a move, signaling that close to a third of its planned near-term investments has now been secured. The majority of the resources raised by the share placement are likely to be invested by the end of the current calendar year. ZTE's filing deems the following three years a critical period for 5G deployment, both in the context of China and the rest of the world.
ZTE's 5G ambitions extend beyond the company's home country but its key target market isn't willing to accept it, with the firm recently being targeted by a U.S. bill that would prevent wireless carriers in the country from purchasing network equipment from it. The legislation that also seeks to block Huawei's infrastructural advances in the U.S. has been heavily criticized by China, prompting additional trade-related tensions between Washington and Beijing. The company's stateside prospects are likely to remain unchanged for the time being, requiring it to refocus its efforts on China and other markets. The fifth generation of mobile networks promises to deliver a wireless revolution that's much more significant than any previous telecommunications upgrade in history by enabling entirely new kinds of businesses.