ZTE Corp, the world's fourth largest handset producer and fifth-ranked telecoms equipment maker, said on Thursday that limitations on its business operations in Iran would have little impact on overall sales.

ZTE, China's second-largest telecommunications equipment maker, last week said it would curtail its business in Iran following a report that it had sold Iran's largest telecom company a powerful surveillance system capable of monitoring telephone and Internet communications.

President Shi Lirong, speaking at a news conference after the company announced its financial results for 2011, said ZTE was not a mainstream telecoms gear supplier in Iran.

Our business in Iran contributes very little to our overall operations, so the impact will be quite small, Shi said.

Western sanctions on Iran have caused complications for a series of companies as U.S. investors are barred from making any new investments in Iran or in property owned or controlled by the Iranian government.

Responding to queries on whether Chinese telecom equipment makers faced challenges in the Australian market, Shi said all of ZTE's products had obtained global certification on the security front.

ZTE's cross-town rival Huawei Technologies hit roadblocks in its telecom equipment business in certain markets, most recently Australia, where the government has barred it from taking part in the country's $38 billion National Broadband Network due to cyber security concerns.

ZTE said on Wednesday that October-December net profit slid 48 percent to 991 million yuan ($157 million) from 1.89 billion yuan a year earlier.

H-shares in ZTE had risen nearly 5 percent by the midday break on Thursday, after jumping as much as 8.5 percent amid market expectations for an improved outlook, bucking a 1.2 percent drop in the broader Hang Seng Index.

Reuters reported last week that ZTE had entered into a $131 million contract with Telecommunication Co of Iran in December 2010.

(Additional reporting by Huang Yuntao; Editing by Chris Lewis and Jonathan Hopfner)