China Telecom Warns of Profit Impact as Key Telecom Services Face Higher VAT Rate

The latest update is out from China Telecom ( (HK:0728) ).

China Telecom has announced that, following a new directive from China’s Ministry of Finance and State Taxation Administration, from 1 January 2026 handset data traffic, SMS/MMS and Internet broadband access services delivered via wireline, mobile, satellite and the Internet will be reclassified from value-added telecommunications services to basic telecommunications services, raising the applicable value-added tax rate on these offerings from 6% to 9%. The company expects this tax reclassification to affect its revenue and profit and says it will respond by accelerating its cloudification, digital transformation and “AI+” strategy, further developing integrated intelligent cloud services and focusing on quality improvement, cost reduction and efficiency gains, while cautioning investors to be prudent in trading its securities amid these regulatory-driven changes.

The most recent analyst rating on (HK:0728) stock is a Buy with a HK$6.00 price target. To see the full list of analyst forecasts on China Telecom stock, see the HK:0728 Stock Forecast page.

More about China Telecom

China Telecom Corporation Limited is a major integrated telecommunications operator in China, providing basic and value-added telecom services including mobile, fixed-line, broadband Internet and related digital and cloud-based offerings. Listed in Hong Kong, the company is focused on cloudification, digital transformation and AI-driven services, positioning itself as a technology-oriented enterprise in China’s rapidly evolving communications and digital infrastructure market.

YTD Price Performance: -0.19%

Average Trading Volume: 64,946,864

Technical Sentiment Signal: Buy

Current Market Cap: HK$598.2B

For detailed information about 0728 stock, go to TipRanks’ Stock Analysis page.