China Telecom Launches Nationwide Token Plan

Overview

Morgan Stanley points out that China Telecom has officially launched a nationwide token subscription plan, providing usage-based monthly service packages for enterprises and consumers. This is the first similar product among the three major Chinese telecom operators to achieve unified national deployment, marking an important step in transforming from a traditional communication service provider to a computing power and AI infrastructure platform.

Core views

This token plan operates in a monthly subscription format. Enterprise plans such as Flagship (CNY 299.9/month) get 150 million tokens, unit price as low as 2.0 CNY per million tokens; Consumer plans such as Exclusive (CNY 49.9/month) provide 80 million tokens, unit price only 0.6 CNY per million tokens. Compared to China Mobile and China Unicom previously piloting at provincial/city levels, China Telecom's launch is nationwide, giving it a first-mover advantage. Notably, its pricing strategy differs from hyperscale cloud providers like Alibaba Cloud—the latter set different point quotas based on underlying model differences, while China Telecom unifies pricing for various models, helping to lower user cognitive thresholds. Morgan Stanley believes this is an active attempt by operators to seek new growth curves under the background where mobile data penetration rates peak and traffic prices continue to fall, belonging to beneficial exploration of the "Compute Power as a Service" business model. However, in the short term, consumer adoption still relies on supporting mature and popular AI application ecosystems; for enterprise customers, the key lies in service integration capabilities, MaaS (Model as a Service) unit indicator performance, and the technical competitiveness of proprietary models.

Analysis framework

Report adopts industry comparison and value positioning analysis framework: Highlighting the strategic significance of China Telecom's nationwide promotion by comparing regional layouts of other domestic operators; revealing its differentiated competition logic through horizontal comparison with pricing mechanism differences with hyperscale cloud providers; and combining macro trends (data price downward trend, computing power demand rise) to judge whether this move constitutes an effective growth inflection point. Overall analysis path is clear, focusing on two core propositions of 'why do it' and 'can it succeed'.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Assess feasibility of new business model by analyzing matching relationship between supply side (operator computing power infrastructure) and demand side (enterprise and individual users' demand for general model calls)

  This method emphasizes observing whether market real demand can be effectively activated given sufficient technology supply. This report calculates user actual usage costs and potential application scenarios to determine if the token plan can form a sustainable commercial loop

• Competition and Strategy FrameworkMoat / competitive advantage

  Analyze ability of enterprises to build barriers in specific areas, such as network coverage, customer base, cost structure, etc.

  Report points out that China Telecom's nationwide network coverage and existing user base constitute its natural advantages in the token service field, which is its core competitiveness distinguishing it from pure internet cloud providers

• Cycle and Prosperity FrameworkProsperity Inflection Point Analysis

  Identify key nodes where the industry shifts from recession or flat period to rising cycle

  Report views the token plan as a landmark event for the telecom industry to find the next prosperous cycle after traditional business growth slows down, holding important turning-point significance

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China Telecom (00728.HK)

  Direct beneficiary, as initiator and sole implementer of the token plan

  Strengths

  Possesses nationwide network coverage, large existing user base, mature operation system

  Weaknesses

  Lacks self-developed advanced models, initially relies on third-party models; user education costs are high, market acceptance has uncertainty

  Comparison

  Compared to China Mobile and China Unicom, possesses first-mover advantage of unified national deployment, but the latter has more flexibility in capital expenditure

  Risks

  AI application ecosystem development falls short of expectations; market competition intensifies leading to price wars; insufficient self-developed model capabilities affect long-term competitiveness

Key data

• Enterprise Average Unit Price2.0-2.7 CNY / million tokensFlagship plan 150 million tokens, priced at CNY 299.9
• Consumer Average Unit Price0.6-1.0 CNY / million tokensExclusive plan 80 million tokens, priced at CNY 49.9
• Nationwide First Launch—China Mobile, China Unicom previously only launched similar products at provincial level
• Pricing Logic—Unified price covers all models, different from hyperscale cloud providers charging based on layered models

Impact & implications

This measure indicates China Telecom is accelerating transformation from "pipeline vendor" to "computing power service provider". For investors, this is not only a product innovation but may also signal a restructuring of the company's future revenue structure. If it can leverage its own network and customer resources to successfully cultivate a high-quality AI application ecosystem, it is expected to occupy a favorable position in the new round of technology wave. However, its success heavily depends on the external environment, especially the development speed of terminal applications and user acceptance.

Risks

• Consumer awareness and acceptance of token services lower than expected
• Lack of strong proprietary models support, difficult to form technical barriers
• Competitors (such as Alibaba Cloud, Tencent Cloud) may quickly follow up and launch more attractive packages

What to watch

• Whether well-known AI applications will access and bind token services subsequently
• Tracking data on enterprise customer procurement scale and usage frequency
• Actual performance and commercialization progress of China Telecom's self-developed models (e.g., GLM series)