Investment Rating - The report indicates a positive outlook for the communication industry, suggesting a potential shift towards a "stronger gets stronger" dynamic due to technological and capital barriers [1]. Core Insights - The communication industry is experiencing a transformation driven by technology and policy support, with a shift in demand from traditional to emerging services [1][39]. - The industry is expected to enter a recovery phase in Q3 2025, with capital expenditure expansion driven by technological breakthroughs and new infrastructure initiatives [39]. - The demand for AI computing power, accelerated commercialization of 5G-A, breakthroughs in 6G technology, and the rise of the "low-altitude economy" are key factors driving the industry's upgrade [1][39]. Supply Capacity Analysis - The report highlights the growth in the optical communication sector, particularly in high-speed optical modules, driven by AI computing demand and increased capital expenditure from global cloud service providers [3][10]. - The domestic penetration rate of traditional optical fiber and cable is nearing saturation, prompting companies to accelerate international expansion [5][4]. - The communication equipment integration market is recovering, with the Asia-Pacific region leading in 5G system integration and services [6]. Demand Matching Capability Analysis - The demand for optical modules, especially high-speed products for data centers, is robust, with a projected shipment increase from 6.4 million units in 2023 to over 31.9 million units by 2025 [3]. - The communication equipment market is experiencing strong growth, with a year-on-year revenue increase of 18.9% in Q2 2025, despite a contraction in 5G investment [11]. - The telecommunications service sector is seeing a shift towards emerging businesses, with significant growth in AI computing and quantum communication services [15][30]. Industry Chain Position Analysis - The communication industry is characterized by a high degree of market concentration, particularly among leading companies in optical communication and equipment integration [24][27]. - The report notes that traditional communication services are facing saturation, with new business areas becoming the core of competitive differentiation [28]. Innovation Capability Analysis - The report emphasizes the importance of policy support for technological advancements, particularly in AI, 6G, and satellite communication [31][32]. - Significant R&D investments are being directed towards AI and 6G technologies, with major companies like China Mobile leading initiatives in these areas [34]. Credit Rating Situation Analysis - The communication industry is witnessing a favorable credit environment, with a total bond issuance of 17.35 billion yuan in Q2 2025, primarily from leading companies [36][37]. - The report indicates that the dual barriers of technology and capital for leading firms will become more pronounced, reinforcing the trend towards market consolidation [36]. Cycle Development Outlook - The communication industry is expected to see revenue and profit growth, with cash flow recovery anticipated in Q3 2025 [38]. - The report forecasts a transition to an expansion phase driven by new infrastructure investments and a focus on domestic demand [39]. Key Segment Development Trends - The optical communication sector is evolving towards ultra-high-speed, intelligent, and integrated solutions, supporting the AI computing network [40]. - The commercialization of 5G-A and advancements in 6G technology are expected to enhance the capabilities of communication equipment integrators [41]. - Telecommunications services are anticipated to diversify, with new opportunities arising from the low-altitude economy and satellite internet developments [42].

Core Viewpoint - China Telecom's Suzhou branch launched 5G-A personal packages and venue packages, marking the city's entry into the commercial era of 5G-A, focusing on enhanced network capabilities in various sectors such as smart energy, telemedicine, industrial internet, and sports events [1][2]. Group 1: 5G-A Network Development - Suzhou Telecom has built over 2,300 5G-A base stations, achieving continuous coverage in key areas of Suzhou, including the Industrial Park and High-tech Zone [1]. - The company plans to cover 80% of high-traffic areas in the next three years, maintaining its leading position in national 5G-A construction [2]. Group 2: New Product Offerings - The newly launched 5G-A personal package offers high upload and download speeds, suitable for travel, live streaming, gaming, and venue usage, along with various benefits [2]. - The introduction of venue packages and monthly data plans lowers user entry barriers and highlights the core advantages of 5G-A's high speed [2]. Group 3: Application Scenarios - 5G-A solutions for large sports venues support multiple ultra-high-definition live broadcasts, immersive VR/AR experiences, and high concurrent user access, enhancing audience experience and event management [3]. - In smart manufacturing, 5G-A enables wireless connections, remote control, and AI quality inspection, significantly improving production flexibility and efficiency [3]. - Collaborations in the low-altitude economy facilitate drone operations, high-precision positioning, and tracking, providing integrated network support for urban security, logistics, and emergency response [3]. Group 4: Partnerships and Future Outlook - Suzhou Telecom officially commercialized 5G-A and signed agreements with three representative companies, indicating a commitment to expanding its service offerings [3].

Core Insights - China Telecom's "6G System Charging Research" project has been officially approved at the 109th TSG SA meeting of 3GPP, marking it as the first 6G charging project within the organization [1] Group 1: Project Overview - The project aims to design new charging models for 6G services, focusing on innovative commercial charging models and metrics [1] - It will explore a charging architecture and mechanism that spans across networks, services, and resources for 6G [1] - The project intends to provide feasible charging solutions for key 6G services such as AI, integrated sensing, and space-ground integration [1]

Group 1 - The core viewpoint of the article is that China Telecom has initiated a project focused on developing a new charging model for 6G services, which is the first of its kind approved by 3GPP [1][3] - The project aims to explore new commercial charging models and dimensions for 6G, as well as to research the charging architecture and mechanisms that span across networks, services, and resources [1][3] - The initiative will provide feasible charging solutions for key 6G services such as AI, sensing, and integrated terrestrial and space communication [1]

Group 1 - The core point of the article is that China Telecom's "6G System Charging Research" project has been officially approved at the 109th TSG SA plenary meeting of 3GPP, marking it as the first 6G charging project within 3GPP [2] - The project aims to design new charging models for 6G services, exploring new commercial charging models and dimensions specific to 6G [2] - It will research the charging architecture and mechanisms that span across networks, services, and resources, providing feasible charging solutions for key 6G services such as AI, sensing, and integrated space-ground systems [2]

Group 1 - The Invesco Great Wall CSI National New Hong Kong Stock Connect Central Enterprise Dividend ETF (520990) closed down 1.58% on September 22, with a trading volume of 154 million yuan [1] - The fund was established on June 26, 2024, with a management fee of 0.50% and a custody fee of 0.10% [1] - As of September 19, 2024, the fund had 4.308 billion shares and a total size of 4.373 billion yuan, reflecting a 15.00% increase in shares and a 24.88% increase in size year-to-date [1] Group 2 - The current fund managers are Gong Lili and Wang Yang, with returns of 17.76% and 4.19% respectively during their management periods [2] - The fund's top holdings include China Mobile, China Petroleum, COSCO Shipping, CNOOC, China Shenhua, Sinopec, China Telecom, China Unicom, China Merchants Bank, and China Coal Energy, with varying holding percentages [2][3] Group 3 - The top holdings and their respective percentages are as follows: - China Mobile: 10.83% - China Petroleum: 10.55% - COSCO Shipping: 9.66% - CNOOC: 9.03% - China Shenhua: 8.09% - Sinopec: 7.66% - China Telecom: 4.85% - China Unicom: 3.68% - China Merchants Bank: 2.63% - China Coal Energy: 2.57% [3]

Group 1 - The "National Computing Power Internet Service Platform" seminar focused on the verification of long-distance RDMA protocol for large model training, marking a significant milestone for the construction of the computing power internet trial network [1][2] - The seminar was attended by leaders from Shanghai Communications Administration, China Academy of Information and Communications Technology, COSCO Shipping Technology, Shanghai Telecom, and Huawei, highlighting the collaborative effort in advancing the computing power internet initiative [1][2] - The initiative aims to enhance the stability and security of long-distance data transmission for large model training, replacing traditional data transfer methods with advanced RDMA protocol [3] Group 2 - The construction of the computing power internet trial network is expected to strengthen China's competitive advantage in the information and communication industry, optimize national computing resource allocation, and support technological innovation in fields like artificial intelligence [4] - Future plans include exploring more verification scenarios and testing innovative technologies to continuously support the development of the computing power internet trial network [4]

Core Insights - The top three companies by Hong Kong Stock Connect holding ratios are China Telecom (71.62%), Gree Power (69.26%), and COSCO Shipping Energy (69.07%) [1] - Alibaba-W, Meituan-W, and Yangtze Optical Fibre and Cable (68.69%) saw the largest increases in holding amounts over the last five trading days, with increases of +135.49 billion, +36.19 billion, and +12.40 billion respectively [1] - Xiaomi Group-W, Tracker Fund of Hong Kong, and Tencent Holdings experienced the largest decreases in holding amounts, with reductions of -19.37 billion, -18.72 billion, and -10.39 billion respectively [2] Group 1: Top Holding Ratios - China Telecom (00728) has a holding of 99.41 billion shares, representing 71.62% [1] - Gree Power (01330) has a holding of 2.80 billion shares, representing 69.26% [1] - COSCO Shipping Energy (01138) has a holding of 8.95 billion shares, representing 69.07% [1] Group 2: Recent Increases in Holdings - Alibaba-W (09988) saw an increase of +135.49 billion in holding amount, with an increase of +85.16 million shares [1] - Meituan-W (03690) experienced an increase of +36.19 billion, with an increase of +34.04 million shares [1] - Yangtze Optical Fibre and Cable (06869) had an increase of +12.40 billion, with an increase of +20.13 million shares [1] Group 3: Recent Decreases in Holdings - Xiaomi Group-W (01810) had a decrease of -19.37 billion in holding amount, with a decrease of -34.16 million shares [2] - Tracker Fund of Hong Kong (02800) saw a decrease of -18.72 billion, with a decrease of -68.81 million shares [2] - Tencent Holdings (00700) experienced a decrease of -10.39 billion, with a decrease of -1.62 million shares [2]

Core Viewpoint - The launch of Apple's iPhone Air in China has been delayed due to regulatory issues surrounding eSIM technology, which is not yet supported by local telecom operators [2][3][4]. Group 1: iPhone Air Launch - The iPhone Air, Apple's lightest flagship smartphone, is currently not available for sale in China, with its release status marked as "to be updated" on official platforms [2]. - The iPhone Air only supports eSIM, which requires regulatory approval for telecom operators in China to offer eSIM services [2][3]. - Apple has indicated that the iPhone Air will only be supported by China Unicom for eSIM activation, requiring users to visit physical stores for identity verification [5][6]. Group 2: eSIM Technology and Regulatory Environment - eSIM technology is seen as a future trend in the telecom industry, but its adoption in China is hindered by regulatory and compliance challenges [3][11]. - Chinese telecom operators are prepared to offer eSIM services but are awaiting formal approval from regulatory bodies [4][11]. - The complexity of eSIM activation processes and the need for stringent security measures have led to delays in service rollout [8][9][14]. Group 3: Industry Perspectives - Industry analysts believe that the widespread adoption of eSIM in China is inevitable, but it will follow a cautious and phased approach [3][11]. - The telecom sector is currently focused on enhancing security measures for eSIM technology to address concerns over user privacy and fraud [8][9][14]. - Companies like China Unicom are exploring advanced technologies, such as blockchain, to improve the security of eSIM services [14].

Investment Rating - Industry investment rating: Positive (maintained) [1] Core Insights - Huawei's Ascend roadmap was released, projecting a tenfold increase in computing power over the next decade, with AI storage capacity expected to grow 500 times by 2035, accounting for over 70% of total storage needs [14][15] - Microsoft announced the construction of the world's most powerful AI data center, Fairwater, with an initial investment of $3.3 billion, expected to be operational by early 2026, which will significantly boost demand for optical modules and switches [5][16] - The report emphasizes the importance of the Huawei AI chain, OCS, and domestic computing sectors, recommending various stocks across these segments [6][11] Summary by Sections 1. Investment Outlook - Huawei's new Ascend chip series will be launched in phases from 2026 to 2028, with significant improvements in bandwidth and computing power [11][12] - The report suggests focusing on seven key investment areas, including network equipment, AIDC construction, IT equipment, computing leasing, cloud computing platforms, AI applications, and satellite internet & 6G [17][18] 2. Communication Data Tracking - As of July 2025, China had 4.598 million 5G base stations, with 1.137 billion 5G mobile users, reflecting a year-on-year growth of 19.68% [25][27] - The report notes a decline in 5G smartphone shipments in June 2025, with a total of 18.436 million units shipped, a year-on-year decrease of 16.7% [25][32] 3. Operator Performance - In the first half of 2025, China Mobile's cloud revenue reached 56.1 billion yuan, a year-on-year increase of 11.3%, while China Telecom's cloud revenue was 57.3 billion yuan, up 3.8% [40][41] - The ARPU values for the three major operators remained stable, with slight decreases noted for China Mobile and China Unicom [40][44]