Chinese telecom equipment maker ZTE Corp warned on Tuesday that penalties it expects to incur for allegedly breaking US sanctions against Iran could impact its results.
In March, the US government hit ZTE with some of the toughest-ever US export restrictions for the alleged breaches. It has since issued temporary reprieves on the curbs, which are now due to take effect some time after February 27, Reuters reported.
“The company has been actively cooperating and communicating with relevant US government departments in order to reach a conclusion of the investigation,” ZTE said in a filing to the Shenzhen Stock Exchange.
“The outcome of the settlement issues still remains uncertain but will likely have a material impact on the financial conditions and operating results of the company.”
Supply Chain in Jeopardy
Measures it has taken to placate Washington include a management overhaul and the appointment of a new chief export compliance officer based in the United States.
If no settlement or reprieve extension were reached before the deadline, US suppliers would be banned from doing business with ZTE, which could cut off much of the Chinese company’s supply chain.
ZTE relies on US suppliers for about one-third of its components.
The company reentered the Iranian market in January 2016 with sales and after-sales services with a local firm called Yas.
Yas has been operating in the realm of official cellphone imports and after-sales services for 12 years.
According to the company’s sales manager at the time, Mohammad Rishpour, ZTE expressed interest in reentering Iran’s market three years ago.
ZTE said in March 2012 that it would curtail business in Iran following a report by Reuters that it sold Iran’s largest telecoms firm a powerful telecoms equipment which some parts were sourced from the US.
Add new comment
Read our comment policy before posting your viewpoints