HSBC Global Research lowered its target price for China Tower (00788) to HK$1.97 from HK$2.36 and downgraded its rating to "hold" from "buy" on lower tenancy ratio estimates.
The research house said China Unicom (00762) attempted to share 4G rollout costs with China Telecom (00728), but with little tangible impact. With 5G the potential investment is larger, and the benefits would be less skewed to Unicom. There is less potential for active sharing with China Mobile (00941), but a near-term roaming agreement is possible, as is more active sharing later on.
HSBC adjusted its tenancy ratio forecast to reflect its view that some form of sharing is likely - it now modeled a medium-term tenancy ratio of 1.54 (HSBC's prior estimate of 1.68 becomes its bull case).