ZTE Corp, China's No.2 telecommunication equipment maker, posted a 58.2 percent increase in profit as domestic carriers build new 3G networks, but that US$58.5 billion spending spree could start to ease in 2010, weighing on margins.

ZTE said yesterday that third-quarter earnings rose to 408.6 million yuan (US$60 million) - based on Reuters calculations - compared with a forecast of 384 million yuan in a Reuters poll and a year-earlier net profit of 258.3 million yuan.

The company also saw improvement in overseas markets - accounting for almost half of ZTE's revenue - which were hurt by slowing investment by foreign telecoms carriers.

An expanding domestic market, aggressive pricing and generous credit terms from Chinese banks have helped ZTE and larger domestic rival Huawei Technologies narrow the market share gap with global leader Ericsson.