CICC: Mainland telecom 5G entering return period, optimistic on China Mobile Limited (00941) and China Telecom Corporation (00728).

CICC released a research report stating that mainland telecom 5G has begun to enter the payback period, and capital expenditures are expected to decrease to support free cash flow performance, while cost control also supports profit stability. In this low interest rate environment, the valuation of the telecom service sector is attractive. The bank stated that for tower companies, as free cash flow is significantly higher than dividend amounts, it believes that catalysts are approaching and there is great potential for dividend increases. At the same time, by the fourth quarter of 2025, the depreciation of existing towers is expected to be completed, leading to a significant increase in profits and substantial shareholder returns. Regarding data centers, while the sector saw a slight valuation recovery this year, the bank believes that with AI driving in 2025, the trend of sector recovery will further strengthen. Additionally, rapid delivery project capabilities, power supply, and location matching may become core competitive factors for data centers. In summary, the bank stated that it is positive on China Mobile Limited (00941) and China Telecom Corporation (00728) in the telecom services sector. In the data center sector, it is bullish on GDS-SW (09698) and VNET Group, Inc. Sponsored ADR (VNET.US).