On February 21, Jefferies released a research report on the phenomenon of higher telecom stocks, saying that Chinese telecom stocks rose on February 20, mainly due to reports that China Telecom is developing ChatGPT-like services that focus on serving smart cities.。The bank believes that this information is suspected of hype, but focusing on urban services is a reasonable trend because telecom operators have huge user data.。In addition, telecom operators have large cloud, data center and network resources to reduce development costs。

The report also mentions that telecom operators can develop ChatGPT services centered on SOE governments, while GPT applications targeting specific industries are more reasonable.。From a monetization perspective, GPT applications targeting specific industries have a greater chance of success。Chinese telecom stocks sit on huge data, involving more than 1 billion mobile users, more than 5.800 million wide users。Most importantly, the government should be willing to support the development of AI products to empower the development and construction of smart cities.。

Jefferies continued to add that the government has been actively supporting the development of AI, so the bank is optimistic about Chinese telecom stocks, mainly not because of GPT, but driven by the IT ecosystem of state-owned enterprises, huge network resources and valuation attraction.。The bank believes that Chinese telecom stocks are well positioned to develop 5G industrial digitization and related AI applications, with cost of ownership advantages over other independent cloud service providers.。If Chinese telecom stocks work with AI experts to accelerate algorithm development, there will be a greater chance of successfully developing commercializable and realizable products。

Finally, the bank said that even if the recent rise in Chinese telecommunications stocks, but the forecast price-to-earnings ratio of these stocks is still in the number of units, dividend yield of high units, in terms of enterprise value to EBITA ratio valuation is still depressed levels.。The bank believes that capital expenditure on Chinese telecom stocks has peaked and started to fall back this year。Even if China Mobile's valuation is lower than China Telecom's, the bank still prefers China Telecom because the latter sits on the customer base of more large companies and has a more advanced cloud integration strategy, and the dividend yield may rise further in anticipation of higher distribution ratios.。

Therefore, Jiefu Rui maintains an optimistic view of Chinese telecom stocks, and preferred the target for China Telecom, then China Mobile, and finally China Unicom, and at the same time give the three major operators a "buy" rating.。