Intelligent Finance and Economics APP learned that Huatai Securities published a research report, stating that as a benchmark for technology central enterprises, operators are expected to benefit from the development process of China's new qualitative productivity: on the one hand, the development of emerging industries such as low-altitude economy, vehicle-road-cloud, satellite internet, AI intelligent calculation, etc. cannot be separated from the upgrade of underlying communication and digital infrastructure. As the national team of digital infrastructure, operators naturally bear the mission of being the leader of the industry chain and serving the needs of national strategic requirements. On the other hand, telecommunications operators have a large base of C-end and B-end customers, which can reach a wide range of actual application scenarios and tap the potential demand market and potential value realization methods of new-quality productivity. In this process, operators will open up new growth points for business digitization and accelerate their transformation into technological innovation companies.

AI: The scale of intelligent calculation continues to expand, and the iteration of large models/applications accelerates.

The competitiveness of the three major operators in the field of intelligent calculation and large models has been further strengthened, mainly reflected in: 1) the continuous increase of intelligent calculation power. By 2024, the guiding indicators of China Mobile/China Telecom's calculation power and digital capital expenditure are expected to reach 47.5/37 billion yuan, an increase of 21%/4% year-on-year, accounting for 27.5%/38.5% respectively. The intelligent calculation scale is expected to exceed 17/21EFLOPS in 2024, and large-scale AI server cluster procurement has been initiated many times. As the operator's intelligent computation centers are gradually delivered and put into operation in places like Hohhot and Lingang, intelligent calculation services are expected to drive the growth acceleration of their cloud business revenue, referring to the experience of North American cloud providers. 2) Operators' self-developed large models such as Jiutian, Xingchen, Yuanjing, etc. continue to iteratively deliver new products, and the coverage rate of "AI+" applications such as government customer service assistants and industrial intelligent quality inspection in complex business scenarios is improving. The commercial closed loops of AI value creation are expected to gradually form.

Low-altitude economy: Operators promote 5G-A upgrade to help realize the integration of low-altitude sensing.

In 2024, the low-altitude industry will be the first year of our country, which was high-profiled in the Central Economic Work Conference and the Government Work Report, and is regarded as the key cultivation of new-quality productivity. We believe that the future low-altitude communication infrastructure will not only meet the communication requirements of aircraft, but also rely on the "perception" capability to make effective supplements to the existing aircraft monitoring system, which cannot be achieved without the upgrade of the network and the cooperation of telecommunications operators. As one of the builders of low-altitude economy infrastructure, telecommunications operators will solve the problem of low-altitude communication and flight section monitoring through 5G-A. Currently, telecommunications operators have built multiple 5G-A sensing integration demonstration zones in cities such as Shenzhen, Hefei, and Nanjing. In addition to communication infrastructure services, they will also participate in industrial links such as smart terminals and cloud platforms, continuously tapping the industrial value in the trillion-dollar blue ocean of low altitude.

Vehicle-road-cloud integration: Industrial development accelerates, and operators benefit from road, cloud and network construction.

In January 2024, the five departments launched the vehicle-road-cloud integration pilot work, and recently started the construction of smart connected cars in Beijing, Wuhan and other places. The complete list of the first batch of pilot cities came out, and the industrial landing speeded up. Vehicle-road-cloud integration industry is composed of vehicles, roads, clouds, network and related supporting platforms. We believe that operators can continue to participate in the construction of roadside infrastructure, cloud platforms and communication networks with their technical accumulation in the fields of IoT, MEC, cloud, big data and 5G dedicated networks, as well as their previous experience in 5G networking and cloud platform construction in the leading demonstration zones of vehicle networking. According to China Association of Automobile Manufacturers' prediction, by 2030, China's vehicle-road-cloud integration roadside infrastructure/cloud platform market size can reach 417.4/21.8 billion yuan respectively, with growth rates of 80% and 57% from 2025 to 2030E.

Industry trends: Steady growth in May, and construction of networks and intelligent calculations advances side by side.

Looking back at recent industry trends, we see that: 1) From January to May 2024, the cumulative domestic telecom business revenue completed 738.7 billion yuan, a year-on-year increase of 3.7%; among them, cloud computing and big data revenue increased by 16.2% and 48.2% respectively, maintaining a rapid development momentum. 2) The purchase of operator computing power continues. On July 5, 2024, China Telecom released a tender notice for the purchase of 156,000 servers, including 13,000 GPU servers. 3) At MWC 2024, the three major operators collectively exhibited a number of large AI models in various vertical areas.

Risk warning: ARPU improves slower than expected; 5G capital expenditure is higher than expected; competition is constantly intensifying.