HSBC-亚太地区电信行业-变形者：亚洲电信业巨头如何改变他们的游戏规则

By:NealeAndersonEquitiesBy:NealeAndersonDiversifiedTelecommunicationsJune2022ShapeshifterShapeshifterstheirgametheirgameExistentialchallengeshaveforcedtoughchoices–incumbentshaverestructuredandoutlinednewgrowthstrategiesVisibilityhasimproved,enablingcompaniestogivemultiple-yeargrowthandshareholderreturntargetsBuyratingsonChinaTelecomH(Hold/A),Telstra,NTTandKTCorp–enterpriseservicegrowthakeypotentialcatalystPlayvideowithNealeAndersonDisclosures&Disclaimer:ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.iversifiedTelecommunicationsJuneWhyreadthisreport?xistentialchallengeshaveforcedtoughchoicesincumbentshaveandoutlinednewgrowthstrategies令Visibilityhasimproved,enablingcompaniestogivemultiple-yearandshareholderreturntargetstingsonChinaTelecomHHoldATelstraNTTandKTenterpriseservicegrowthakeypotentialcatalystNealeAnderson*HeadofTelecomsResearch,AsiaPacificTheHongkongandShanghaiBankingCorporationLimitedneale.anderson@.hk+85229966716AsiastelcogiantsarenotwhattheywerearsthenarrativearoundthesecompanieshasbeenoneofmanageddeclineLegacyrevenuestreamssuchasfixedlinetelephonyhavefacedstructuralpressures.Andmanyhavefacedexistentialchallengesfromfixed-linemargincollapse(Telstra),todividendcancellationKTmobilesubscriberexodusNTT)toregulatoryheadwinds(alloftheabove).Thesechallengeshaveforcedtoughchoices,andmuchrestructuring.Wearguethatthebenefitsare–finally–becomingapparent.isibilityhasenabledmultiyeartargetsTelcoshavegonefrombeingunwillingtoguideoneyearaheadtoissuingmulti-yearstretchtargetsSomerepresentlargechangesinmanagementmindset,suchasChinaTelecom’sgoalofa0%dividendpayoutratiobyFY23(FY05-20averageof39%).Wethinkinvestorsshouldbesimilarlyencouragedbyothermetrics:Telstra’stargetforemployeeengagementof90%ormorebyFY25(from67%inFY19)reflectsgrowingconfidenceinitsoutlook.tycompanieswithdefensivequalitiesTheseBuyratedstocksareupby3-36%overthepastoneyear.Thisreflectsboththeirdefensivequalitiesandgrowingrecognitionofthechangesthathavebeenmade.WethinkrsjuststartingtoinflectWebelieveenterpriseservicescanstillgrowinaweakeningmacroenvironment,ascompaniescutcostsviaoutsourcinganddigitalizingTelstraisnotableinitsabilitytopassthroughinputcostincreasestoconsumers,andhasannouncedanAUD3-4mobiletariffincreasefromJuly.Crucially,thedeclineincapitalintensityisbothstructuralanddurable:telcosarenowstartingtoinvestforgrowth,ratherthantokeeppacewithcoveragetargetsmandatedbygovernmentsorpeers.BuyHoldChinaTelecomHABuyratingsonNTTKTCorpandTelstraerecentlyupgradedKTCorpandNTTreflectingtheprogressthesecompanieshavemadeinlimitingpotentiallossfromlegacybusiness,andidentifyingnewsourcesofgrowth.Multi-yearguidancereflectsimprovedvisibilityandwelookformoredetailedguidanceatearningscallsasapotentialcatalyst.Wemakenoforecastorratingchangesinthisreport.1KTCorp(030200KS):UpgradetoBuy:Firingonallcylinders,12May20222NTT(9432JP):UpgradetoBuy:Everythinginitsrightplace,19May20222iversifiedTelecommunicationsJuneWhyreadthisreport?1Factsandfigures3KeyHSBCstockcalls4Investmentsummary5Substantialchangesunderthehood5Forecastsrelativetoconsensus,catalysts6Restructuringforgrowth8Multi-yearguidance,targetsreflectsanew-foundconfidence8Restructuring:fromcrisistoopportunity9Mobile:fromdragtogrowth9Enterprisesolutions–aspiringtomoveupthevaluechain11managementAneweraofcapitalexpenditure:investingforgrowthDividends–increasinglyimportantESGinitiatives14Energytrends:infocusdueto5Ganddatacentreexpansion14Social14Governance15Asiatelcos–valuationtrends16Valuation,rating,risks17ChinaTelecom17KTCorp18NTT19Telstra19Disclosureappendix26Disclaimer313DiversifiedTelecommunicationsJunefromrevenuebyFYfrominQAUD2-3bnaEBITDAfromtheNationalBroadbandNetworkChinaChinaTelecom’spayoutratiostoodatanraiseditspayoutto60%in2021,andtargets70%by2023,inamajorshiftinsshareholderreturntargetforFYDecember2023elstramobiletariffsestructuringPuppptsYoYmarketsharetargetinFY20)9090thpercentileelstrasFYemployeeengagementtargetfrominFY19,78%inFY21gagementtargetsarepartofeExecutiveVariableRemunerationPlanEVPalongwithfinancialtargets,improvementsinEpisodeNetPromoterScoreNPSanddigitalengagementinNTTdividendfromFYY24.6%ecomIndustrialDigitalizationasofservicerevenuesinFY4iversifiedTelecommunicationsJunes30200KS令令令P令令令straAU令令令0728.HK令令令728CH令令令iversifiedTelecommunicationsJunexistentialchallengeshaveforcedtoughchoicesincumbentshavendoutlinednewgrowthstrategies令Visibilityhasimproved,enablingcompaniestogivemultiple-yearandshareholderreturntargetstingsonChinaTelecomHHoldATelstraNTTandKTCorpenterpriseservicesinfocusatnextsetofresultsttelcoshavefacedructuralchallengesTheshareholderreturnoutlookhasimprovedgreatlybstantialchangesunderthehoodAllofthecompanieswelookatinthisreporthavefacedsomeformofcrisisinthepastseveralyearsKThadtocancelitsdividendin014,NTTexperiencedmultipleyearsofmobilehandsetsubscriberlossesTelstrahadtocontendwitharecurringAUD2-3bnhittoEBITDAfromtheNationalBroadbandNetworkNBNwhileChinaTelecomfacedheavymobilepriceregulationaswellaspressuretodeploy5Grapidlyatscale.Facedwiththesechallenges,managementteamshavemadetoughchoices–webelievepositivesignsfromthesechangesarenowstartingtoemergeSimilaritiesincludemobilerecovery,andafocusonenterprisesolutionsparticularlydatacentres)andadjustingcoststructurestoreflectthenewshapeofthebusiness.MobileoutofthewoodsMostmobilebusinesseshavestruggled,duetoacocktailofcompetitionregulatorypressureandGrolloutThesepressuresarenowstartingtoease.Lessregulatorypressureiscoupledwithincrementalbenefitsfrommigrationto5G:lowercapitalintensityandstablecompetitionareresultinginimprovingfreecashflowsMobilebusinesseslookincreasinglystable.eapareholderreturnsmuchimprovedThisimprovedoutlookisreflectedinshareholderreturnswithdividendpoliciesatcompaniessuchasChinaTelecomtransformed.Anincreaseinpayoutratiosfromc40%to60-70%coupledwithstabilizingtrendsbodeswellfordividendsSeveralofthesecompaniesareincreasinglyusingbuybackstofurtherimproveshareholderreturns.GgovernancelooksbetterbutenergyoutlookismixedEnvironmentTelcosparticularlyincumbenttelcosarehugeusersofenergyandthensmosthavetoexpanddatacentreswillincreasethisGreenenergyplansarethusfrontandcentreofESGcommitments.NTTandTelstrastandout:Telstrawasdeclaredcarbonneutralin2020andisaimingtosourcerenewableenergyequivalentto100%ofconsumptionbyNTTintendstoreduceemissions80%by2030(fromFY13):itplansforNTTDoCoMoandthedatacentrebusinesstobecarbonneutralby2030,andthewholebyThesetwoareclearleaderswelookforsimilarinitiativesfrompeers6iversifiedTelecommunicationsJune令Social.Theextenttowhichex-governmentownedtelcoshaveembracedflexibleworkingpracticesisameasureofthechangeinculture,inourview.Telcoshavealsosteppeduptheirfocusondigitalinclusion,aswellasdisasterpreparationandrecovery.nanceparticularlyinboardrepresentationhasimprovedsubstantiallyTelcoshadlimitedindependentandfemalerepresentationincertainmarketsexceptingTelstra,whichhaslongbeenaleader),buttheyhavemadelargechangesinthepast1-2years.ivetoconsensuscatalystsTTglobalsolutionsmargintrendsarekeyThedomesticbusinessincludingDoCoMo–looksincreasinglystable.OurfocusisonthemargintrendatGlobalSolutions–thiswas6.3%inFY21,withNTTwellontracktoitstargetof7%inFY22.令Telstra–mobileinfocus.Telstrastockhasbeenweakrecently,likelyreflectinguncertaintyoveracAUD6-18bnFebruary2022dealtoshareruraltowerswithTPGTelecom,whichispendingregulatoryapproval.TelstraandTPGargueitwillcreateincreasedcompetitioninruralareaswhileOptusarguestheopposite.TelstrawillraisemobiletariffsbycAUD-4inJulytocombatcostinflation:resultsinAugustwillbethelastforretiringCEOAndyPenn.TelecomenterprisesolutionsgrowthWeexpectmobileandfixedtrendstobestableatChinaTelecominQThekeyiscontinuedgrowthmomentumintheindustrialdigitalizationbusiness,givenheavycompetitionfromallthreeChinatelcos.KTCorpSimilartoChinaTelecomenterpriseanddigicogrowthisinfocusatKT.Wealsolookforanupdateonassetmonetizationplansparticularlyinitsfintechandcloudbusinesses.Asiatelcos:HSBCevsConsensusiversifiedTelecommunicationsJuneTelecomusedtobealargeproportionoftheAsianstockuniverse.In2008,itwasasmuchasnearly12%oftheFTSEAsiaex-Japanindex.ButChartAshowsthatthishasfallentojustabove2%.Meanwhilethecomponentsoftheindexhaveseenaremarkableshiftaswell.In2006,fixed-linetelecomoperatorswerenearlyhalfofthewholetelecomuniverseBythathadfallen(duetoconsolidationaswellasdeclinesinmarketcapitalization)tonearlyzero.Andfrom2021,telecomequipmentmakeshavebecomeamajorconstituentofthetelecomsector.ChartATelecomsweightinAsiaisdownfrommorethan10%in2009tojust2.8%nowThisisalsoillustratedinChartBandChartCLargeoperatorssuchasChinaTelecom,ChinaMobileandChinaUnicomwereremovedfromtheindexinJanuary021aftertheUSbarredinvestmentsinthesecompanies.Afewmonthslater,inMarch21,TelecomequipmentstocksweremovedfromtheTechsectortobecomeanewsub-sectorwithintheTelecomsector.Theynowconstitute31%inthesectorandincludenamessuchasXiaomi,andAcctonTech.hartBChinaTelecomChinaMobileandChinaUnicomformedoftheweightin15rtCNewsubsectorTelecomghtInwasalsowhenthefixedlineandmobiletelecomweregroupedtogetherandrenamedTelecomServices,whichnowformsoftheoverallTelecomsector.WethinkthesechangesmakeithardertousethisindexasatruereflectionofthetrendsintheTelecomServicessector.Withinthesector,ourpreferenceisforthetelecomservicesproviders–wearemorecautiousonthetelecomequipmentnames.8iversifiedTelecommunicationsJuneverebalancedthedeclineoflegacybusinessisynewgrowthcoverymigrationtohighspeedbroadbandandenterprisesolutionsincludingdatacentres–areallsourcesofgrowthityandimprovingregulatorydynamicshasenabledltiyeargrowthandreturntargetsthefirstforseveralyearsarguidancetargetsreflectsanewfoundconfidenceTelcoshavegonefromedornoguidancetortargetsAmeasureoftheconfidencethesecompaniesnowhavecanbeseenintheirguidance.Previouslytheoutlookwassodifficultthatthesecompaniesofferedthebareminimumofguidance–capexandarevenuegrowthaspirationfromKT,forinstance.NowhoweverthesecompaniesareofferingmultiyearguidanceameasureoftheconfidencetheyhaveintheoutlookImportantlyseveralhaveROICtargets,aimingforgrowthfromcurrentowlevels令TelstrahastargetedROICof8%byFY25,upfrompriorguidanceof7%.InAugust2020itlowereditstargetfromtonotingtheimpactoftheadoptionofASB16accountingmeasuresimpactofcpptaswellasaslowerrecoveryinthemobilebusiness.Sincethenanimprovingoutlookhasenabledittoliftitstargetto8%.NTTtargetsROICofbyFYatargetitissuedinNovember8.Itreported7.6%intheyearendingMarchandtargets7.6%inFY22.ImprovementattheinternationalbusinessisanimportantdriverofimprovedROIC.asissuedmultiyeartargetswhicharerelativelyrareintheKoreantelcosectorItachievedits2022OPtargetofKRW1trnoneyearearly.cumbentROIClongtermcumbentROIClongtermtrend iversifiedTelecommunicationsJunetionhaseasedinmostemarketsandrationtoGishelpinghinaTelecomChinaTelecomhasalsoissuedmultiyearguidanceunusualintheChinesetelcosectorIthasguidedforanincreaseinthedividendpayoutratio(60%intoreach70%ormoreinFY2023.Itisalsoguidingfordouble-digitrevenuegrowthintheIndustrialDigitalizationcategory(includesdatacentres,enterprisesolutionsetc).storicalROICtrendsshowTelstratobeanoutlierreflectingitspositionasthedominantentityinalargegeographyaswellashighprofitabilityofthefixed-linenetwork.ThedeclineinTelstrasROICshowstheimpactofthetransitiontotheNBN:TelstrahadthehighestfixednetworkcostbaserelativetopeersandiscurrentlymakingmarginsclosetozeroontheresaleoffixednetworkservicesWeforecastasteadyinflectionforallofthesecompanies,takingROICcomfortablyabovecostofcapital–nosmallachievementinsomemarketsgiventhehistoricalperformance.ngfromcrisistoopportunityAllofthecompanieswelookatinthisreporthavefacedsomeformofcrisisinthepastseveralyearsKThadtocancelitsdividendin2014,NTTexperiencedmultipleyearsofmobilehandsetsubscriberlosses,TelstrahadtocontendwitharecurringAUD2-3bnhittoEBITDAfromtheNBNwhileChinaTelecomfacedheavymobilepriceregulationaswellaspressuretodeployGatscale.Facedwiththesechallenges,managementhavemadetoughchoicestotransformthebusiness–webelievepositivesignsfromthesechangesarenowstartingtoemerge.Acrossthesecompaniesweseesimilartrends:amobilerecovery,afocusonenterprisesolutionsparticularlydatacentresandafocusonadjustingthecoststructuretoreflectthenewshapeofthebusiness.dragtogrowthilemarketsinAustraliaandNorthAsiahavebeenthroughasimilartrajectoryoverthepastfiveyears.Heavycompetitionorregulatorypressurehasbeencompoundedbyuncertaintyrelatingtothecostof5Grollout,andapossibleincreaseincompetitionfromthis.InmidtelecommarketsarelookingalotmorestableGinvestmentispastthepeak,andforthemostpartregulationandmarketcompetitionhaseased.5Gdemandisslow,butiscontributingtoincrementalimprovementsinARPUandservicerevenuesNetworksharinginseveralmarketshashelpedalignoperatorrolloutplans,makingithardertodifferentiateandresultinginfeweroutbreaksofzerosumcompetitionforcustomers.ChinaTelecomrevenuemix,RMBbnGlobalSolutionsrevenuesJPYbn0-iversifiedTelecommunicationsJunelanstutoortyoinbyyodDoCoMoForyearsNTTDoCoMowasasourceofsubscribersforotheroperatorswithasteadyoutflowbeginningwhenSoftbanksecuredtheiPhonein2008.NTThaschangedDoCoMomanagementandnewinitiativeshavevastlyimprovedDoCoMo’scompetitivenessThekeyinitiativewasannouncedinDecember2021,withthedigitalbrandahamotooffer20GBofdataforJPY2,980–lowerthancompetitorspricesatthetimeAfterseveralfailedtariffrebootsunderpreviousmanagementthisonewas–finally–effectiveinpersuadingcustomerstostaywithDoCoMo.IthasalsoresultedinincreasedinterestfromcustomersatothercarriersandDoCoMo’snumberportabilitystatisticshaveimprovedasaresultNeverthelessthecommunicationsmarketremainstough.NTThasrespondedbycreatingalargerIntegratedICTBusinesssegment,includingNTTCommandCommwareaswellasDoCoMoItaimstooffsetthedeclineinconsumermobilebyexpandingenterpriseservicesandgrowingitsSmartLifebusiness.ItaimsforsynergybenefitsofJPY100bnbyFY23,andJPY200bnbyFY25.orpKTandpeershaveseenasteadyrecoveryinmobileservicerevenuesafterheavyregulationimplementedearlyintheadministrationofPresidentMoon.Thisand5GadoptionhasallowedmobileservicerevenuetoreturntolowsingledigitgrowthforthefirsttimeinseveralyearsImportantlytherecentKoreanpresidentialelectionfeaturedverylittlementionofthetelecomsector.ChinaTelecomChinesetelcosarealsoreturningtolowsingledigitgrowthafteryearsofheavytariffpressurefromregulationTheyarealsoseeingsomebenefitsfromGadoption.Inbothmarketswebelievetheoutlookisrelativelystable,withpotentialgrowthupsidecomingfromenterpriseadoptionof5G.prevenuemixKRWtrn8.06.04.0- subsidiaryOPcontributionbn-SubsidiariesKTParentiversifiedTelecommunicationsJunelytelcoswillfocusonconnectivitybuttelcoshopetomoveupthevaluechainKoreaandChinalookwell-placedforstablelowsingledigitgrowth.WeexpecttheJapanesemobilemarkettoremaintough,withcompetitivepressurefromRakuten,aswellascustomers‘tradingdown’tocheapertariffsofferedbythethreemainbrands.WearemostoptimisticregardingthemobileoutlookforTelstrainAustralia.Ithasaverystrongpositionwithits5Gnetwork,andweexpectthistoremainadurablecompetitiveadvantage.Havinggotthroughthepainofeliminatingits‘backbook’itisnowabletoputthroughpriceincreasestooffsetcostinflation,thefirstofwhichwilltakeeffectfromJuly2022.sesolutionsaspiringtomoveupthevaluechainThesetelcoshavemadeenterprisesolutionsacentralpartoftheirgrowthplansrangingfromChinaTelecomasthemostambitious,toTelstra.ThisreflectsthehighlevelofregulationandcompetitioninconsumermobileaswellasincreasingdemandfromcorporatesneedingtodigitalizetheirbusinesstocopewithpressuresbroughtonbyCOVID-19.Thishasrelevanceinseveralareas:nnonaerprisesolutionsTheaimofthesecompaniesistomoveupthevaluechaintooffermorebespokeenterpriseservices,runningfromsecuritytomanagedservicestosystemsdesignandimplementationSofarwehavelimitedvisibilityonthesuccessoftheseinitiativescontractwinsaremostlysmall,andwehaveverylittlevisibilitywithregardtomarginsRealisticallyorganictelcoexpansioninthisareaisgoingtotaketime,astelcostransitionfromaconnectivityandcontractbasedsalesmodeltoonebasedondeliveringspecificsolutionsNTTbycontrasthasattemptedtobuildthiscapabilityinpartviaM&Asincethe10acquisitionofDimensionData.MultipleyearsofrestructuringinthisbusinessandthentheimpactofCOVID-19havedelayedprofitability,butthisfinallyappearstobeimproving–webelieveNTT’srelativesuccesswillbeanimportantindicatorastowhethertelcoscansucceedinthisarea.iversifiedTelecommunicationsJuneGandfibrecapexhaspassedtelcosarenowabletoinvestforgrowthasopposedtomeetinggovernment5GdemandsratingtrendsaregivingtelcomanagementteamslityonearningsandthusdividendsagementmindsetshavechangedinfavourofdividendsmostandKoreaAneweraofcapitalexpenditure:investingforgrowthxbudgetslooksimilarbuthaveshiftedinfavourofowthcapexryearsGandfibreinvestmenthavehungovertheindustryInChinaspeculationregardingverylarge5Ginvestmentbeganaround2018,andeffectivelyovershadowedthesector.InallofthesemarketstheGandfibreinvestmentpeakhaspassed,with5Grolloutrankingassomeofthemostextensiveglobally.angeinemphasistoinvestforgrowthInvestorshavebecomeusedtohighcapexmaskingthesignificanceofthechangeInChina,thechangeinemphasiswasclearinguidanceissuedinMarch2:allthreetelcosguidedforstableordeclining5Gandcoretelecomcapexandallthreeannouncedgrowthininvestmentindatacentresandenterprisesolutions.ksharingisrelativelynewinthesemarketsUnlikeEuropewherenetworksharinghasbeencommonformanyyearsGhasseennewnetworksharingdealsinNorthAsiaInKoreasharedruralrolloutshouldsavetrillionsofKRWinaggregate,withsimilarbenefitsinJapanforKDDIandSoftbankChinaTelecomandUnicomaredramaticallybetteroffasaresultoftheirGnetworksharingagreement.InallofthesepexasofsalesdecliningnaTelecomcapexRMBbnGpeak-ataTelstraDPSAUD%payout0Ypayout0marketsGrollouthasbeenmoremeasuredandfeaturedlessvalue-destructivecompetitionthantheraceforsubscriberswith4G.rerolloutmostlymaintenancecapexAidedbydenserhousingandbystartingrlyNorthAsianincumbentshaveconcludedthemajorityoftheirfibrerolloutNTThasevenwithdrawnfromretailshiftingitsfocustowholesalingtheservicetotelecompeers.Eachofthesemarketshasaveryhighrankingofbroadbandspeedandavailabilitycomparedtoglobalpeers.nglyimportantlinvestorshavebecomealargerfactorinthemarketwithagreaterfocusondividendChinaTelecomandChinaMobilehavebothcompletedA-sharelistingsinthepastyearleadingtoagreaterfocusondividendsastheyadjusttoanewshareholderbaseInKoreaalsoretailownershiphasgrownthroughtheCOVID-19pandemic.SKTelecomcompletedastocksplitinparttoremainaccessibletothisgrowingclassofinvestors.EasingregulationimprovingvisibilityUltimatelythishasenabledthemulti-yeardividendguidanceweveseenfromseveralofthesecompaniesAfteraperiodofintenseearningspressure,theoutlookisnowimproving.hinaTelecomDPSRMBpayoutratio- orpDPSKRWpayoutratio-iversifiedTelecommunicationsJune令WebelieveNTTandTelstrahavesomeofthestrongestESGentialsintheAsiantelecomssectoraveannouncedstrongenergyinitiativesofcriticalortelcosandtheexpansionofdatacentrefacilitiesfeguardsattheboardlevelhaveimprovedicantlytrendsinfocusduetoGanddatacentreexpansionWewroteaboutTelstraandNTT’senergyambitioninour11October2021reportEnergyambitionWehighlightedthesectorleadinginitiativesannouncedbythesetwocompanieswithregardtoboththeirownenergyusage,andinsupplyinggreenenergytoconsumers.andTelstraaresectorleadersintheirgreenenergycommitmentsNTTandTelstraareaheadofpeersonenvironmentalmetrics:Telstrawasdeclaredcarbonneutralinandisaimingtosourcerenewableenergyequivalentto100%ofconsumptionbyNTTintendstoreduceemissionsby80%by2030(fromFY13):itplansforNTTDoCoMoandthedatacentrebusinesstobecarbonneutralby2030,andthewholecompanybyBothcompaniescanleveragestrongretailbrands,localfacilitiesforenergystorage,andreducechurnbyscalingupinenergy.令Telstraplanstotapintogreenenergydemand.JapanesetelcoshavebeenenergyretailerssincederegulationinApril2016.Theyhavepartneredwithtraditionalsuppliers,andmarketshareisstillrelativelysmall.Telstrabycontrastaimstobecomeatop-fivesupplierby2025,andwebelieveithasanopportunitytotapintodemandforgreenenergysolutionsfrombothconsumersandbusinessesTelstrahassignedthreePowerPurchaseAgreementsPPAsthatwillgiveitupto352MWinrenewablecapacityby2025.NTTaimstoinvestJPY450bn(USD4bn)toincreaseitsgreenenergycapacityto3.8bnkWhperyearby2030,equivalenttoc22%ofrenewableandhydroelectricpowerinFY17.TelstraandNTTsenergyplansareamongtheclearestinAsia.BycontrastwelookformoredisclosurefromtheChinesetelcosinparticularregardingtheimpactoftheirexpansionindatacentresand5Gnetworks.Thechangeincorporateculturehasbeenprofoundatmanyofthesecompanies.Asex-governmentownedentities,thesewerenotcompaniesknownforflexibleworking,innovationordynamismHowevertheyhavetakenimportantstepstowardschangingthecorporateculture,withspecificgoalsforbothattractingandretainingemployees,aswellaspromotingsocialinclusionandotherbenefits.iversifiedTelecommunicationsJuneJapan:telcomarketshareinenergyretail,%令Attractingandretainingemployees.Telstra’staglineinitsT25targetsis“TheplaceyouemoteworkingTelstraalsoaimstoattractstaffbasedonitsenvironmentaltargetsandsocialinclusioninitiatives.ItsT25targetaimsforemployeeengagementinthe90thpercentile.NTT’sstrategyblueprintannouncedinOctober2021featuresafocusonremotework,alargeshiftfromitsprevious,Tokyo-centric,approach.eandmanagerdiversityNTThassetfixedtargetsforfemaleemployeesincludingofmanagersbyFY25,and25-30%ofdirectors.IthasalsosetatargetofmidcareerhiresofinFYmarkingashiftfromtraditionalJapanesecorporatepractice.令Socialinclusionanddisasterrecovery.Telstraaimstokeep1mcustomersinvulnerablecircumstancesconnectedeachyearfromFY5.NTTandNTTDoCoMoaimtoexpandandimprovetheirprovisionfordisasterrecoveryimportantduetoJapansvulnerabilitytoearthquakes.Telstrahaslonghadoneofthemostdiverseandindependentboards.Othertelcosarecatchingup,makingnewcommitmentstoimprovediversityandindependence.NTTInJuneNTTincreasedtheratioofoutsidedirectorsfrom27%to50%.InAugustitincreasedthepercentageofofficers’performance-linkedcompensationfromc30%toByendJune022itaimedtoincreasetheboardsizeto10(from8)with5outsidemembersNTTtargets30%oftheboard,auditandsupervisorybodiesandseniorvicepresidentstobefemale.令Telstra.TheCEOistheonlyexecutivedirectoroftheboard,andTelstraaimsforallnon-executivedirectorstobeindependent.KTCorpAtKToftheboardmembersconsistofoutsidedirectorsandtheCEOisseparatedfromtheboardchair.Allmembersoftheaudit,evaluationandremuneration,andinternaltransactioncommitteesarecomposedofoutsidedirectorsnaTelecomChinaTelecomhasatwotierboardstructureWhileboththeChairmanandChiefExecutiveOfficerroleshavebeenfilledbythesamepersonChinaTelecompointstothisbeingrelativecommoninothermarkets.iversifiedTelecommunicationsJuneAsiatelcos–valuationtrendsSharepriceperformancerebasedn Asiatelcos:EV/EBITDAmultiple-n Asiatelcos:dividendyield,%n iversifiedTelecommunicationsJuneValuation,rating,risksInflationriskishighestinAustraliaTelstraiswell-positionedtoputthroughCPIlinkedincreasesthefirstofwhichwillbegininJulyfocusatresultsforChinaTelecomandKTCorpwillbetheirgrowthsolutionsparticularlydatacentres令AtNTT,welookforcontinuedgrowthintheGlobalSolutionsnesswhichtargetsaOPmargininFYomWecontinuetouseaDCF-basedsum-of-the-parts(SoTP)valuationapproachtobettercapturethevalueofChinaTelecomscoretelecombusinessinChinaaswellasinvestm