ZTE allowed to temporarily resume some US business

The US Commerce Department on Tuesday granted a temporary reprieve to ZTE that allows the telecommunications equipment maker to conduct business needed to maintain existing networks and equipment in the US as it works toward the lifting of a US sales ban.

The department's Bureau of Industry and Security said in an announcement on its website the authorization shall take effect immediately until Aug 1, during which China's No 2 maker of telecoms gear is allowed to resume transactions with US suppliers to support existing networks and equipment.

In line with the authorization, ZTE also could make necessary transactions to provide services and support to its existing handsets that were available to the public on or before April 15, including software updates and patches.

However, the BIS announcement also noted the existing ban slapped on the firm in April remained "in full force and effect".

The United States barred companies from exporting components to ZTE for seven years on April 15, saying the latter had violated a previous settlement of charges for selling products to Iran and North Korea. The ban has forced ZTE to suspend its main operations.

The Shenzhen-based company agreed to a deal with the US that included paying a $1 billion penalty, putting $400 million in escrow to cover any future violations and changing its board of directors and executive team.

ZTE changed its entire board and appointed a new chairman last week, and a US Commerce Department official told Reuters last month ZTE was expected to deposit the $400 million in an escrow account in the "next couple of days," saying that was the last step before the ban could be lifted.

Still, it is not clear whether the ban will be completely removed. In an environment of uncertainty, ZTE shares bore losses over the ban and cratered 60 percent since trading resumed last month after a two-month hiatus, wiping off more than $11 billion of the company's market valuation, according to data from Reuters.

ZTE shares on the Shenzhen Stock Exchange rose 2.6 percent on Wednesday closing at 13.8 yuan ($2.08) per share, following a surge to the 10 percent daily limit on Tuesday. ZTE shares in Hong Kong dropped 3.43 percent to HK$12.38 ($1.58).