[ET Net News Agency, 11 September 2018] HSBC Global Research resumed coverage on China
Telecom (00728) with "buy" rating, and a higher target price of HK$4.7 (from HK$4.5).
The research house said China Telecom's domestic business is still generating steady
growth despite aggressive competition from China Mobile (00941) and China Unicom (00762).
For its wireline business, the broadband subscriber growth rate slowed to 8.9% in FY2017
from 10.6% in FY2016 under pressure from Mobile's low-price strategy. However, going into
2018, HSBC expects Mobile's momentum to slow down as it attempts to migrate customers to
higher-speed services. A key focus point for Telecom will be its ability to meet the
regulatory requirement to eliminate data roaming by 1 July 2018 without significantly
affecting profitability. HSBC believes a move to higher data allowances could offset most
of the risk.
HSBC cut its net income forecast for Telecom due to lower net income forecasts for China
Tower (00788). (KL)