ZTE Corp, the mainland's second largest telecoms equipment manufacturer, reported first-quarter net profit dived 86 percent following a slump in mobile equipment sales.

ZTE's net profit fell to 33.4 million yuan (HK$32.32 million) in the first quarter, compared to 230 million yuan a year ago, the company said in a statement to the Shenzhen Stock Exchange. ZTE said its first-quarter results were prepared according to mainland accounting standards.

Sales of mobile telecoms equipment, ZTE's core business, fell 28.4 percent to 1.37 billion yuan but this was offset by higher sales of mobile handsets and data equipment. Turnover rose 6.9 percent to 4.6 billion yuan.

'Mainland telecom operators reduced their investments in their PHS and CDMA networks during the period,'ZTE said.

The company is a major supplier of PHS equipment to fixed-line operators China Telecom and China Netcom. ZTE is also a supplier of CDMA equipment to mobile operator China Unicom. Last week, ZTE warned its first quarter net profit will fall between 50 and 100 percent because of lower mobile equipment sales in domestic and overseas markets. ZTE's Hong Kong-listed H shares, which dropped 2.3 percent to HK$27.15 Tuesday, have fallen 13.5 percent since last week's profit warning. ZTE's Shenzhen-listed A shares rose 2.5 percent to 24.91 yuan Tuesday.