JPMorgan has released a research report indicating that the three major mainland telecom operators have announced an adjustment to the value-added tax (VAT), which will see the business tax rate for mobile data, SMS/MMS, and internet broadband services increase from 6% to 9%. The bank forecasts that this adjustment will impact the 2026 net profits of China Mobile (00941), CHINA TELECOM (00728), and CHINA UNICOM (00762) by 7.1%, 12.6%, and 11.9% respectively, and estimates that the impact on China Mobile will be the smallest among the three operators due to its higher gross margin. However, the bank believes the actual impact on earnings may be milder than these estimates, as the three major telecom companies are currently undergoing state-owned enterprise (SOE) reforms, and the authorities have set financial KPI targets for SOEs, including profit growth, improved return on equity, and healthy cash flow. It is anticipated that the telecom operators can offset the impact of the VAT adjustment through various measures, including optimizing operating expenses, implementing price increases, and controlling capital expenditures.