Lluis Gene | AFP | Getty Images
People walk in front of the ZTE stand at the Mobile World Congress on February 27, 2018 in Barcelona.
Chinese telecoms giant ZTE announced a brand new board on Friday in a radical management shakeup as part of a $1.4 billion deal with the United States, moving the item closer toward getting a devastating American supplier ban lifted.
The United States slapped the crippling seven-year supplier ban on ZTE, China’s No. 2 telecommunications equipment maker, in April after the item broke an agreement to discipline executives who conspired to evade U.S. sanctions on Iran along with also North Korea.
The management overhaul was among the conditions laid out within the settlement deal to hold the ban lifted.
Li Zixue was elected as the company’s brand new chairman, ZTE said in exchange filings late on Friday.
The old board along with also senior management, headed by Chairman Yin Yimin, have tendered their resignation on June 29, the item added.
The company, which ceased major operations after the ban, has also agreed to pay a $1 billion penalty along with also put $400 million in an escrow account as part of the deal to resume business with U.S. suppliers – who provide almost a third of the components used in its equipment.
yet the U.S. Department of Commerce has still not worked out the details necessary for lifting the ban, with the deal facing strong opposition by some U.S. lawmakers.
The uncertainty over the ban amid intensifying U.S.-China trade tensions has hammered ZTE shares, which have cratered 60 percent since trading resumed earlier of which month following a two-month hiatus, wiping out more than $11 billion of the company’s market valuation.
Some investors along with also analysts have questioned whether a brand brand new board along with also management team can settle in quickly enough along with also lead the company out of the woods.
“I am most interested to see how well the brand new board will manage the company, as well as their technical expertise in telecoms. I don’t know how experienced they are in both these respects,” said a ZTE employee, who declined to be named due to the sensitivity of the issue.