Citi released a research report maintaining its "Buy" ratings on China Mobile (00941), China Telecom (00728), and China Unicom (00762). Among them, the target price for China Mobile was raised by 5.1% from HK$97 to HK$102, the target price for China Unicom was raised by 18.6% from HK$7 to HK$8.3, while the target price for China Telecom remained unchanged at HK$5.7.
The report noted that in the third quarter of 2026, revenue for China's telecommunications industry may continue to face pressure. In the first eight months of this year, industry revenue declined by 2.2% year-on-year. This was mainly due to a base reset resulting from value-added tax (VAT) adjustments, rather than an equivalent deterioration in underlying demand.
The bank believes that this slowdown has largely been digested by the market, and investor focus is shifting toward the commercialization and monetization of artificial intelligence (AI) infrastructure as well as dividend returns. Despite a decline in total capital expenditure, more than one-third of the three telecom operators' 2026 investment is being redirected toward computing infrastructure.
According to estimates, by 2028, the total data center capacity of the three telecom operators is expected to double from 8.7 gigawatts (GW) in 2024 to 17.5 GW. From a valuation perspective, H-shares are more attractive, with an average dividend yield of approximately 7%.
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