CLSA released a research report indicating that CHINA TELECOM's (00728) performance in the second half of last year was disappointing. Service revenue increased by only 0.2% year-on-year to RMB 2,363 billion, as growth in mobile service revenue slowed to an annual increase of 0.7%, while industrial digital revenue fell 0.5% year-on-year. This was primarily due to the group's focus on cloud projects with better cash returns. The group declared a dividend per share of HK$0.272 for 2025, marking a 4.7% annual increase, with a payout ratio reaching 75% and a dividend yield of 6.1%. CLSA lowered its adjusted net profit forecasts for CHINA TELECOM by 6% and 9% for this year and next, respectively. The target price was reduced from HK$6.2 to HK$6, while maintaining an "Outperform" rating. The firm anticipates that CHINA TELECOM's revenue will continue to face pressure this year amid macroeconomic challenges. Ongoing reductions in capital expenditure are expected to support profits and dividends, although the pace of dividend growth may slow. The group forecasts that net profit growth will outpace revenue growth in 2026, as depreciation is projected to peak between 2025 and 2026.