Nomura China Telecoms: NIFA Takeaways – China Mobile and China Telecom
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Nomura reports a stable competitive landscape in the Chinese telecommunications sector following the NIFA conference, noting that the 5G investment cycle has passed its peak. Both China Mobile and China Telecom emphasized declining capital expenditure trends while committing to higher dividend payouts.
China Mobile guided 2026 capital expenditure at 180 billion yuan, representing a 10% year-over-year decrease and falling below market expectations. China Telecom set its 2026 capex guidance at 90 billion yuan, down 8%. Both companies increased their payout ratios to 70%, with China Mobile raising its ratio from 65% and China Telecom from 60%.
With 5G user penetration reaching 60% and ARPU stabilizing, competitive pressures have eased. China Mobile expects 5% service revenue growth in 2026 with an EBITDA margin of 38%, while China Telecom projects 6% service revenue growth with a 30% EBITDA margin. Neither company mentioned large-scale 6G investment plans, and regulatory risks have diminished as policy focuses shift toward high-quality development.
Nomura maintains a Buy rating on China Mobile (0941.HK) with a target price of 85 HKD, citing capex reductions, dividend growth, and improving free cash flow as primary catalysts. The firm retains a Neutral rating on China Telecom (0728.HK) with a 4.5 HKD target, noting slowing fixed-line growth and limited dividend upside.