Core Insights - EngageLab, in collaboration with China Unicom Global, HKT, and Huawei, has launched the OpenGateway Cross-Operator Converged Authentication Solution, setting a new standard for secure and scalable user authentication across borders [1] Industry Challenges - The expansion of enterprises into international markets necessitates robust identity authentication, yet fragmented operator capabilities and inconsistent standards hinder seamless user verification [2] - Traditional SMS-based authentication methods are prone to fraud and inefficiencies, negatively impacting user experience and business security [2] Solution Overview - OpenGateway combines the strengths of its partners by integrating their number verification and OTP-SMS capabilities into a single API, allowing enterprises to access secure authentication services globally without region-specific adaptations [3] - The solution reduces integration cycles from months to weeks and lowers operational overhead, facilitating rapid deployment in new markets [4] Security and User Experience - OpenGateway employs a dual-layered authentication architecture, utilizing carrier-grade number verification primarily, with SMS verification as a fallback, ensuring high availability and stability [6] - This design effectively prevents fraudulent activities while providing a seamless experience for legitimate users, enhancing conversion and retention rates [6] Developer Benefits - The standardized encapsulation based on the CAMARA framework allows for quick and low-barrier integration, accommodating differences among operators [7] Proven Impact - OpenGateway is already operational in Mainland China and Hong Kong, processing over 20 million authentication requests daily and supporting hundreds of millions of users across various sectors [8] - In finance, fraudulent loan applications have decreased by 60%, while e-commerce has seen a 75% reduction in fake registrations and a 65% cut in marketing resource waste [8] - Social and gaming sectors report a 28% increase in new user retention and a significant drop in complaints, improving the overall digital experience [8] Cost Efficiency - Enterprises utilizing OpenGateway have reported over 50% reduction in long-term maintenance costs and a 40% decrease in anti-fraud expenses, allowing for resource reallocation towards core business innovation [9] Global Expansion - OpenGateway is expanding into Southeast Asia, including Singapore and Indonesia, and is positioned to become the global benchmark for cross-operator authentication, with a modular design that supports rapid rollout [10]

Core Viewpoint - The forum highlighted the urgent need for collaborative efforts in AI and cybersecurity governance as the integration of AI into various sectors poses significant challenges to network security and societal stability [1][3]. Group 1: AI and Cybersecurity Challenges - The integration of AI into economic and social sectors has led to various societal issues, and its malicious use in cyber warfare and propaganda poses severe threats to network governance and economic security [3]. - There is a significant gap in cybersecurity professionals, with a global shortage of 4.8 million, indicating an urgent need for increased focus on cybersecurity measures [5]. Group 2: Technological Developments in Cybersecurity - The approach to data security has evolved from point protection to a "smartly connected" systemic defense, emphasizing the need for comprehensive solutions that leverage AI for data classification, risk detection, and automated operations [7]. - The establishment of a unified data security management platform aims to enhance interconnectivity and strategy alignment across various security products, marking a shift towards an AI-driven collaborative defense system [7]. Group 3: Collaborative Initiatives - The launch of the integrated security operation center for digital governance in Yuhua District aims to strengthen the security framework for regional digital government initiatives [9]. - A strategic partnership signing ceremony involved 16 partners collaborating with China Unicom to enhance the AI and cybersecurity ecosystem, focusing on resource sharing and technological cooperation [11].

Investment Rating - The report maintains a "Positive" investment rating for the communication industry [9]. Core Insights - The communication sector saw an increase of 8.71% in the 48th week of 2025, ranking first among major industries in the Yangtze River region. Year-to-date, the sector has risen by 64.42%, also ranking first [2][4]. - Google's introduction of the Nested Learning theory and HOPE architecture significantly enhances long-term memory and reasoning efficiency, addressing the memory bottlenecks of traditional Transformers in long sequences, which can greatly reduce training and inference costs [5][7]. - Anthropic's Claude Opus 4.5 has achieved state-of-the-art performance in software engineering, with aggressive pricing strategies that lower input and output costs by 67%, while also integrating deeply with existing office workflows [6][7]. Summary by Sections Market Performance - The communication sector's performance in the 48th week of 2025 was highlighted, with notable individual stock performances, including Guangku Technology (+39.2%), Tongyu Communication (+39.1%), and Taicheng Light (+22.3%) [4]. Technological Advancements - Google's Nested Learning paradigm optimizes memory processes by breaking down large models into nested sub-optimization problems, enhancing memory management and reducing inference costs [5]. - The HOPE architecture, based on this theory, separates high-frequency and low-frequency memory tasks, improving efficiency in long-sequence processing [5]. Product Launches - Anthropic's Claude Opus 4.5 supports a context window of approximately 200k and has outperformed competitors in software engineering tasks, with a significant reduction in usage costs for enterprises [6]. Investment Recommendations - The report recommends several companies across various segments, including: - Telecom Operators: China Mobile, China Telecom, China Unicom - Optical Modules: Zhongji Xuchuang, Xinyi Sheng, Tianfu Communication - AI Applications: Boshi Jie, Heertai, Tuobang Co., Yiyuan Communication - Satellite Applications: Huace Navigation, Haige Communication, Canqin Technology [7].

Market Overview - On December 2, the communication services sector rose by 0.3% compared to the previous trading day, with ST Xintong leading the gains [1] - The Shanghai Composite Index closed at 3897.71, down 0.42%, while the Shenzhen Component Index closed at 13056.7, down 0.68% [1] Stock Performance - ST Xintong (600289) closed at 7.04, up 5.07% with a trading volume of 15,800 lots and a transaction value of 11.12 million [1] - Other notable performers included: - Zhongfutong (300560) at 19.94, up 3.75% with a transaction value of 1.227 billion [1] - Shijihengtong (301428) at 35.79, up 2.90% with a transaction value of 263 million [1] - Guanghuanxinwang (300383) at 13.14, up 1.78% with a transaction value of 508 million [1] Capital Flow - The communication services sector experienced a net outflow of 697 million from institutional investors, while retail investors saw a net inflow of 667 million [2] - The table of capital flow indicates that: - Sanwei Communication (002115) had a net inflow of 58.26 million from institutional investors [3] - China Unicom (600050) had a net inflow of 52.54 million from institutional investors [3] - China Telecom (601728) had a net inflow of 48.78 million from institutional investors [3]

Core Viewpoint - Goldman Sachs' research report indicates that despite weak revenue growth in traditional telecommunications, Chinese telecom companies can leverage value-added services to drive consumption, with new business areas such as data centers, computing power, and AI solutions becoming major beneficiaries of AI development [1] Group 1: Financial Metrics - The report examines ten key indicators including capital expenditure, dividends, user numbers, cash conversion cycles, free cash flow margins, average revenue per user (ARPU), EBITDA margins, new business synergies, internet data center performance, and valuations [1] - It is expected that the capital expenditure budgets of China Mobile, China Unicom, and China Telecom are shifting towards investments in computing infrastructure to capitalize on the growing demand for AI in China [1] Group 2: Investment Outlook - Goldman Sachs maintains a "Buy" rating on China Mobile, China Unicom, and China Telecom, anticipating an increase in the contribution from new businesses and a steady rise in dividend payout ratios, which will continue to provide returns for investors [1]

Group 1 - China United Network Communications Group Co., Ltd. has obtained a patent titled "Index Creation Method, Device, and Storage Medium," with authorization announcement number CN116226118B, applied for on December 2022 [1] - China United Network Communications Group Co., Ltd. was established in 1994, located in Beijing, primarily engaged in telecommunications, broadcasting, television, and satellite transmission services, with a registered capital of approximately 10.48 billion RMB [1] - The company has invested in 34 enterprises, participated in 3,281 bidding projects, holds 3,738 trademark records, and has 5,000 patent records, along with 11 administrative licenses [1] Group 2 - Unicom Digital Technology Co., Ltd., established in 2006 in Beijing, focuses on software and information technology services, with a registered capital of approximately 988.98 million RMB [2] - The company has invested in 54 enterprises, participated in 5,000 bidding projects, holds 24 trademark records, and has 1,900 patent records, along with 42 administrative licenses [2] Group 3 - Unicom Cloud Data Co., Ltd., established in 2013 in Beijing, is engaged in internet and related services, with a registered capital of 400 million RMB [2] - The company has invested in 1 enterprise, participated in 2,265 bidding projects, holds 709 patent records, and has 11 administrative licenses [2]

Core Insights - The China Academy of Information and Communications Technology reported the economic operation of the telecommunications industry for the first ten months of 2025, highlighting significant growth in broadband access and user numbers [1] Group 1: Broadband Access Growth - As of the end of October, the total number of internet broadband access ports in China reached 1.243 billion, representing a net increase of 40.89 million compared to the end of the previous year [1] - The total number of fixed internet broadband access users among the three major telecom operators (China Mobile, China Unicom, and China Telecom) reached 697 million, with a net increase of 27.01 million users since the end of last year [1] Group 2: High-Speed Internet Adoption - The number of fixed internet broadband access users with speeds of 100 Mbps and above reached 663 million, accounting for 95.1% of the total user base [1] - Users with access speeds of 1000 Mbps and above reached 238 million, marking a net increase of 31.13 million users, which is a historical high [2] - The proportion of users with gigabit access (1000 Mbps and above) expanded to 34.1%, an increase of 3.3 percentage points compared to the end of the previous year [2]

1 December 2025 | 7:32PM HKT Equity Research China Unicom (0762.HK): Rising AI Capex with wide IDC coverage; Integrated telecom users in expansion; Buy We view China Unicom as one of the key beneficiaries of the rising AI trend in China, supported by continuous Capex spending on AI computing infrastructure and its wide coverage of IDC cabinets across China. The company's 3Q25 revenues remained flattish at Rmb92.8bn (vs. -1% YoY in 2Q25), and Unicom Cloud delivered double digit YoY growth in 3Q25. Despite mu ...

Core Insights - AI infrastructure is a crucial foundation for the development of artificial intelligence technology, with 58% of enterprises in China currently utilizing AI, significantly higher than the global average, positioning China as a leader in the field [1][8] - The demand for AI infrastructure computing power in China is surging due to complex scenarios, massive data, and ultra-large models, with investments expected to reach 169.6 billion yuan in 2024, an increase of 105.4 billion yuan from 2023, and projected to grow to 275 billion yuan by 2025 [1][8] AI Infrastructure Industry Definition and Classification - AI computing infrastructure is essential for the rapid development of AI, requiring telecom operators to deploy appropriate technical architectures to provide high-performance AI computing capabilities [2] - The infrastructure consists of hardware (including AI chips like GPU, FPGA, and ASIC) and software components (including foundational software platforms and AI-enabled service platforms) [2] AI Infrastructure Industry Development Status - The AI industry is a key area of global development, accelerating technological and economic progress, with increasing application scenarios, explosive data growth, and exponential increases in algorithm model parameters, necessitating higher performance from supporting infrastructure [4] AI Infrastructure Investment Trends - Global AI infrastructure investment is rapidly increasing, projected to reach 598.5 billion yuan in 2024, up 169.9 billion yuan from 2023, and expected to grow to 1.374 trillion yuan by 2025 [5][6] AI Infrastructure Industry Value Chain - The industry value chain includes upstream components (computing hardware, network hardware, storage hardware), midstream system integration and solution service providers, and downstream AI application companies across various sectors such as finance, healthcare, and smart cities [8][9] AI Infrastructure Industry Competitive Landscape - The competitive landscape is dominated by telecom operators, third-party IDC service providers, and major cloud service giants, including China Telecom, China Mobile, China Unicom, and cloud services from Alibaba, Tencent, Baidu, and Huawei [10] - In Q1 2025, Alibaba Cloud led the market with a 33% share, followed by Huawei Cloud at 18% and Tencent Cloud at 10%, indicating a strong focus on AI deployment among these companies [10][11] Future Development of AI Infrastructure - To meet the potential computing power demands from the rapid development of large models, operators should actively build new AI computing infrastructure, focusing on comprehensive layouts across computing, platforms, models, and applications [12]

Group 1 - China United Network Communications Group Co., Ltd. has obtained a patent for a "Photovoltaic Roof System," with authorization announcement number CN116145909B, applied for on December 2022 [1] - China United Network Communications Group Co., Ltd. was established in 1994, located in Beijing, primarily engaged in telecommunications, broadcasting, television, and satellite transmission services, with a registered capital of approximately 10.48 billion RMB [1] - The company has invested in 34 enterprises, participated in 3,281 bidding projects, holds 3,738 trademark records, and has 5,000 patent records, along with 11 administrative licenses [1] Group 2 - China Xunyi Postal and Telecommunications Consulting Design Institute Co., Ltd. was established in 1991, located in Beijing, primarily engaged in software and information technology services, with a registered capital of approximately 573.33 million RMB [1] - The company has invested in 15 enterprises, participated in 5,000 bidding projects, holds 97 trademark records, and has 1,375 patent records, along with 20 administrative licenses [1]