JP Morgan assigned an “Overweight” rating to China’s three major state-owned telecom operators, viewing the sector as a primary beneficiary of artificial intelligence monetization following the launch of new AI token plans.
The bank believes AI monetization and improving competition will drive average revenue per user (ARPU) growth to resume from 2026 and earnings growth to recover from 2027, according to its research report.
JP Morgan named China Mobile as its top H-share pick among the three, but identified China Telecom as the best proxy for the AI token theme. The bank noted China Telecom's cloud business is forecast to comprise 25 percent of its service revenue in 2025, higher than China Mobile’s 12 percent and China Unicom’s 21 percent.
The bullish call reflects investor optimism that telecoms are successfully evolving from bandwidth providers into AI service brokers. The move sent H-share prices for all three companies higher on May 18, cementing their status as a "bricks-and-mortar" play on AI.
The new services effectively turn AI computation into a utility. China Telecom has begun offering monthly AI usage packages starting at 9.9 yuan ($1.37) for 10 million tokens, which are the small units of data processed by AI models. China Mobile has launched a similar universal token service in Shanghai.
The strategic shift comes as AI demand in China explodes. Daily consumption of AI tokens surpassed 140 trillion as of March, a more than 1,000-fold increase from the beginning of 2024, according to the National Data Administration.
Unlike startups competing on price, the state-owned carriers are leveraging their nationwide infrastructure and cloud networks to build integrated AI ecosystems. China Mobile's "MoMA" platform aggregates over 300 mainstream AI models, including those from DeepSeek and Zhipu AI, routing user requests to the most efficient model.
The new ratings signal a fundamental reframing of telecom stocks from stable utilities to AI-driven growth investments. Investors will now watch for quarterly results to see how the new token plans translate into ARPU and margin growth through the second half of 2026.
This article is for informational purposes only and does not constitute investment advice.
