JPMorgan Upgrades Big Three Chinese Telecoms, Picks China Mobile as Top Choice

Deep News05-20

JPMorgan released a research report stating that the H-share prices of the three major Chinese telecom stocks rose yesterday (18th) due to the launch of AI Token packages targeting SMEs and retail users. This reflects investor optimism about telecom operators becoming beneficiaries of AI monetization within the "real economy." The firm maintains a positive outlook on China Mobile (00941), China Telecom (00728), and China Unicom (00762), assigning an "Overweight" rating to all three.

The report suggests that improvements in AI monetization and reduced "involution" within the telecom services sector are expected to drive a recovery in ARPU growth starting from 2026, with profits resuming growth from 2027. 2026 is expected to be impacted by adjustments to value-added tax.

Among the three major telecom stocks, JPMorgan's top pick in H-shares remains China Mobile, followed by China Telecom and then China Unicom. The report indicates that China Telecom serves as a proxy stock for the AI Token theme and stands to benefit the most from positive sentiment surrounding China's AI Token theme and the launch of DeepSeek V4. This is due to its cloud business revenue projected to account for 25% of service revenue in 2025, higher than China Mobile's 12% and China Unicom's 21%. China Telecom has initiated trial commercialization of its Token packages, targeting individual/household users, developers, and SMEs, integrating its proprietary Xingchen large model, the ZhiPu GLM5, and other mainstream domestic models.

At the 2026 Mobile Cloud Conference, China Mobile elevated its AI Token operations from standalone packages to the platform and ecosystem level. Centered around its "Mobile Cloud Model Service Platform MoMA" and a broader Token operation ecosystem, it has already connected over 300 mainstream AI models. China Unicom's personal user Token plans are divided into three tiers, and its Unicom Cloud and "Unicom Yuanjing" MaaS platform have launched personal and team Token plans.

The computing power capital expenditures (for cloud/IDC/AI) of the three major telecom operators are projected to continue rising in 2026, with China Telecom and China Mobile showing year-on-year increases of 26% and 62% respectively, demonstrating their commitment to AI.

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