Morgan Stanley: The preferred among the three major telecommunications companies is China Telecom Corporation (00728) and CHINA TOWER (00788), with their rating upgraded to "hold".

Morgan Stanley released a research report indicating that they remain optimistic about mainland telecom companies maintaining dividends. They also expect the industry to benefit from reduced capital expenditures after the 5G cycle, as well as potential improvements in operating cash flow. Compared to telecom operators, Morgan Stanley is more optimistic about the development of data centers and tower companies in the Chinese market. Currently, Morgan Stanley's preferred ranking for the three major telecom operators is China Telecom Corporation (00728), China United Network Communications (00762), and China Mobile Limited (00941), all of which have a "hold" rating. The bank predicts that the growth rate of service revenue in the mainland telecom industry this year will slightly increase to 3.2%, compared to 2.7% in 2024, but still lower than the pace of economic growth. This is mainly due to pressure on traditional businesses and a shift of focus on new businesses to cash flow. It is expected that China Telecom, China Unicom, and China Mobile will achieve dividend growth rates of 9%, 20%, and 6% respectively this year. Morgan Stanley believes that CHINA TOWER (00788) has a more resilient growth outlook, with a compound annual growth rate of dividends per share of 30.3% from 2023 to 2026, much higher than the three major telecom operators. Therefore, they have raised their rating for CHINA TOWER to "hold" with a target price of 1.3 Hong Kong dollars. The bank is also optimistic about strong domestic demand for data centers, and favors GDS-SW (09698) and VNET Group, Inc. Sponsored ADR (VNET.US).