The three major telecom operators maintained stable performance in Q3, with China Unicom performing the best, with revenue and profit increasing by 3.3% and 8% respectively. China Mobile faced a decline in ARPU and revenue, with EBITDA decreasing by 5%, but profits remained positive due to a decrease in depreciation. China Unicom's EBITDA growth slowed to 0.4%, but profits increased significantly. China Telecom saw an improvement in EBITDA profit margin, with significant growth in cloud business. The overall industry remains stable, with high certainty for the future, but lacks growth potential, with dividend yield providing a safety net
The Q3 performance of the three major telecom operators remained relatively stable, with China Unicom's stock price showing strength, possibly due to the strongest revenue and profit performance, with growth rates of 3.3% and 8% respectively, outperforming China Mobile's -0.1% and 1.1%, as well as China Telecom's 2.9% and 3.5%.
Specifically, China Mobile, being the largest in scale, faces many challenges. In Q3, mobile ARPU/revenue accelerated decline, with EBITDA dropping by 5% from a 1% growth in Q2. However, benefiting from reduced depreciation, profits were able to maintain growth. Additionally, the growth in accounts receivable narrowed significantly, in line with the operational characteristics of government and enterprise business as mentioned in the financial report.
While China Unicom's revenue growth remained stable, under cost pressures, the growth trend of EBITDA slowed down from a 2% increase in Q2 to 0.4% in Q3. Nevertheless, with cost control efforts, profits saw significant growth.
It is worth noting that the company announced a change in depreciation policy starting from October 1st, extending the depreciation period of 4G equipment from 7 years to 10 years, resulting in an estimated annual reduction of depreciation expenses by 1.1 billion to 1.2 billion.
Among the three, China Telecom is the only one achieving an increase in EBITDA profit margin. On one hand, it demonstrates better cost control, and on the other hand, cloud/industrial digitalization and other businesses are catching up with traditional telecom services.
Currently, China Mobile is facing operational bottlenecks but holds a large amount of cash, making it possible to further increase dividends, although the limit is only raised from 75% to 100%. China Unicom sees steady growth in annual profits along with an increasing dividend payout ratio, while China Telecom shows growth potential in cloud business.
The industry as a whole is generally stable, with high certainty for the future, but growth certainty is not sufficient. Considering the general trend of interest rate cuts domestically and internationally, the dividend yield of telecom operators can serve as a safety net. From a bond perspective, it is still very stable