Di Yi Cai Jing·2026-02-01 13:03Core Viewpoint - The increase in the value-added tax (VAT) rate from 6% to 9% for certain telecom services will negatively impact the revenue and profits of China's three major telecom operators: China Mobile, China Unicom, and China Telecom [1][2]. Group 1: Tax Rate Changes - The new VAT regulations, effective from January 1, 2026, redefine the applicable tax categories for telecom services, shifting mobile data, SMS, and broadband services from the category of value-added telecom services (6% VAT) to basic telecom services (9% VAT) [2][3]. - The adjustment expands the definition of basic telecom services to include mobile data, SMS, and broadband services, which were previously classified under value-added services [3]. Group 2: Impact on Operators - The tax rate increase will lead to a higher tax burden for the three major operators, although their monopolistic position may help mitigate the overall impact [3]. - The potential for price increases in broadband and SMS services exists due to the higher VAT rate, but the extent of this will depend on consumer demand elasticity [4]. Group 3: Financial Context - Recent data indicates a decline in national public budget revenue by 1.7% in 2025, alongside a 7% decrease in government fund budget revenue, highlighting the need for increased tax revenue through such adjustments [5].