Telco - China Mobile releases optical fiber cable tender

■   China Mobile released a new optical fiber cable tender (for usage in 2021–2022) today.  

■   The tender size of 142.3m fkm is about 20% higher than its previous tender in 2020.

■   According to the tender document, China Mobile will select 10–14 eligible suppliers.

■   Despite a flat price cap, we believe that the final ASP will be higher than that in the previous round, given industry consolidation. 

■   We maintain the view that the recovery in pricing will be a rerating catalyst for YOFC [6869.HK] and its peers, including Hengtong [600487.CHK] and Zhongtian [600522.CH].

■   We remain constructive on equipment suppliers, including ZTE [763.HK] and YOFC.