Telecom stocks are experiencing a broad-based rally. At the time of writing, China Unicom (00762) shares are up 5.02% to HK$6.49. China Telecom (00728) shares have risen 4.1% to HK$4.57, while China Mobile (00941) shares have gained 2.27% to HK$78.9.

Drivers Behind the Surge

The move follows recent announcements regarding a strategic shift towards a token-based business model. It has been confirmed that China Mobile has established a dedicated Token Office to manage the entire process of creating, distributing, and applying tokens. Furthermore, at the recent 2026 China Internet Conference, China Unicom's Qiu Baohua stated that the company views token operations as a key driver for improving quality and efficiency across the group. Similarly, China Telecom's Vice President Luan Xiaowei emphasized the push to transform the business model towards tokens and build an inclusive AI ecosystem.

Analyst Perspective on the Shift

Analysts point out that telecom operators are transitioning from a traditional traffic-based business model to a token-based one. The three major state-owned operators are regarded as high-quality dividend assets with significant value due to their high-yield payouts, offering cash dividends twice a year, with expectations for the dividend payout ratio to continue rising. A decline in capital expenditures is anticipated to reduce future depreciation and amortization costs, supporting stable operations. This fundamental shift in business model from traffic to token operations is seen as having the potential to enhance both profitability and valuation multiples for the sector.