Nomura issued a report indicating that the growth of the telecommunications industry in mainland China slowed in the first quarter, with service revenue growing by 0.7% year-on-year, and a growth of 1% in the first four months of this year. China Mobile (00941.HK), China Telecom (00728.HK), and China Unicom (00762.HK) respectively grew 1.4%, 0.3%, and 2.1% year-on-year.
Nomura believes that core businesses, including mobile and broadband, continue to be under pressure due to a saturated consumer market and increasingly fierce competition. The emerging businesses like DeepSeek's LLM and other Gen AI applications in the AI cloud space, as well as IDC, maintain healthy growth.
In the first quarter, China Telecom's IDC revenue reached 9.5 billion RMB, growing by 10.4% year-on-year, while China Unicom's IDC revenue grew by 8.8% year-on-year to 7.2 billion RMB. Looking ahead to the 2025 fiscal year, the company expects capital expenditures to continue to decline in order to maintain cash flow and increasing dividends. At the same time, the H-share rating for China Unicom was upgraded to 'Buy,' and the target prices for the three major Chinese telecommunications stocks were adjusted upward, as detailed in another table.
