The three major operators gathered in A shares to accelerate the transformation and development and welcome the return of value

A few days ago, the China Securities Regulatory Commission issued the approval of China Mobile's A-share IPO, and then China Mobile announced the prospectus, conducted a preliminary inquiry on December 16 and 17 to determine the issue price, and conducted an online subscription on December 22. With the return of China Mobile, the three major telecom operators will all gather in the A-share market, what impact will this bring? How to transform and develop to meet the return of value has become an examination topic for operators.

01

Raise funds to focus on 5G construction

According to the prospectus, China Mobile's fundraising purpose will focus on "new infrastructure, new elements, new kinetic energy", promote the transformation of digital intelligence, and build a new digital intelligence ecology, which will be used for 5 projects such as 5G boutique network construction, cloud resource new infrastructure construction, gigabit wisdom home construction, smart middle office construction, new generation information technology research and development and digital intelligence ecological construction, with a total investment of 156.9 billion yuan and the proposed investment of 56 billion yuan.

China Telecom, which has previously been listed, also said in the prospectus that at present, new infrastructure such as domestic 5G, big data centers, and industrial Internet is experiencing rapid development and popularization. With the further integration of a new generation of information technology into the manufacturing industry, domestic digital applications have also achieved rapid development. Therefore, the investment project of this fund-raising project can effectively expand the penetration rate and operating income of China Telecom's 5G business.

From the perspective of China Telecom and China Mobile's fundraising investment, the focus will be on the development of China's 5G industry and new infrastructure construction. In the 4G era, the key point of competition among the three major operators lies in the conversion of existing users, and in the 5G era, with the continuous innovation of new services and new profit models, the key points of competition among the three major telecom operators have shifted, and the development of government and enterprise customer directions and the integration and expansion of cloud network integration have become the new directions of the three major operators. The application of xinchuang in the high-computing demand industry represented by operators has taken the lead in landing, which is expected to drive the follow-up breakthrough in the fields of finance, energy and Internet.

02

What will be the impact of returning to A-shares?

First of all, for the A-share market, Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, said, "The three major telecom operators gathered in A-shares, on the one hand, they added high-quality blue-chip stocks and investable themes to A-shares, greatly optimized and improved the structure of the A-share market, and promoted the stable operation of the A-share market." On the other hand, it has also caused a large-scale expansion of the A-share market, which has improved the liquidity of A-shares to a certain extent. ”

Secondly, for the industrial chain, the return to A-shares can increase the frequency of information exposure of China Telecom and China Mobile, directly drive the coordinated development of the industrial chain, and allow a wider range of industries and investors to share the development dividend. From the list of bidders for the 2021 server centralized procurement project announced by China Telecom, Huawei, Tsinghua Tsinghuashan, Inspur, Shuguang and other manufacturers won the bid, and the number of domestic chips accounted for 20% of the servers announced this time, reaching 24,800 units. From the perspective of value, according to the results of the winning bid, Kunpeng accounts for 55% of them, and HG accounts for 45%. The telecommunications industry took the lead in carrying out industry credit creation, and Haiguang and Kunpeng with the best performance became the main beneficiary chip manufacturers.

03

Accelerate the transformation and development to welcome the return of value

Returning to A-shares, we have to mention the valuation issue. At present, the valuation level of the three major domestic operators is far lower than the average level of leading operators in Europe and the United States, and the average price-to-book ratio of global operators is 7.6 times that of the three major operators in China; measured by the price-to-earnings ratio, the average valuation of global operators is 2.7 times that of china's three major operators, and the result measured by EV/EBITDA (enterprise value multiple) is 5.1 times.

Huatai Securities Research Report believes that China's telecom operators are experiencing significant changes in industry policies, competitive environment, growth expectations and operating efficiency. On the one hand, since the commercialization of 5G, the penetration rate of domestic 5G users has increased rapidly, and the competition in the operator industry is expected to become rational, and the revenue of domestic operators' mobile services is expected to continue to pick up in the next three years. On the other hand, the development of 5G applications is expected to spawn ToB market opportunities, and in the future, enterprise cloud migration and digital transformation will bring operators a broader growth space, industrial digital services are expected to become a new growth point for domestic operators, and the proportion of revenue is expected to continue to increase rapidly. In the 5G era, operators are expected to achieve long-term good investment returns driven by accelerated performance growth, extended return period, controllable capital expenditures and expenses, and the value of the industry is just around the corner.

Communications expert Ma Jihua also believes that the three operators who are least optimistic will become the needle in the digital economy stocks. At present, the three major operators must do a good job in business and serve the society through 5G new infrastructure; second, they must strengthen operations and achieve enterprise innovation and development; third, they must strengthen capital operations to provide value for investors.