CITIC Construction Investment: Satellite, Rocket, Application Resonance - Focus on Investment Opportunities in the Satellite Internet Industry Chain

According to the Zhitong Finance APP, CITIC Construction Investment has released a research report stating that the Ministry of Industry and Information Technology has issued a document to promote the development of the satellite communication industry, specifically mentioning that "by 2030, new models and new business formats such as direct satellite connections for mobile phones will be widely applied, with satellite communication users exceeding ten million." The direct connection of mobile phones will fully open up the market space for satellite applications. On the satellite side, since the end of July, the speed of GW networking in China has significantly accelerated, and the "Guiding Opinions" propose to accelerate the construction of satellite internet systems. On the rocket side, several large liquid rockets, including Lijian-2, Zhuque-3, Tianlong-3, and Chang Zheng-12 modifications, will have their maiden flights within the year, which is expected to enhance launch capacity and reduce launch costs. The resonance among satellites, rockets, and applications highlights investment opportunities in the satellite internet industry chain.

The main points of CITIC Construction Investment are as follows:

The Ministry of Industry and Information Technology recently issued the "Guiding Opinions on Optimizing Business Access to Promote the Development of the Satellite Communication Industry"

The date of the document for the Ministry of Industry and Information Technology's "Guiding Opinions on Optimizing Business Access to Promote the Development of the Satellite Communication Industry" is August 25, 2025. The "Guiding Opinions" propose that "by 2030, the management system and policies and regulations for satellite communication will be further improved, the industrial development environment will continue to optimize, the innovation vitality of various business entities will fully burst forth, and the comprehensive development levels of infrastructure, industrial supply, technical standards, and international cooperation will be significantly enhanced. New models and new business formats such as direct satellite connections for mobile phones will be widely applied, with satellite communication users exceeding ten million, promoting the full integration of satellite communication into the new development pattern, and effectively serving the high-quality development of the economy and society."

Key contents of the "Guiding Opinions on Optimizing Business Access to Promote the Development of the Satellite Communication Industry"

The "Guiding Opinions" propose relevant requirements from six major aspects: overall requirements, orderly expansion of market access, continuous expansion of application scenarios, cultivation and growth of the industrial ecosystem, optimization of telecommunications resource supply, strengthening of satellite communication regulation, and enhancement of system promotion synergy.

The overall requirements propose to take optimizing business access as the traction, enrich application scenarios, cultivate technology industries, optimize resource supply, enhance governance capabilities, fully release the development potential of China's satellite communication industry, accelerate the construction of a standardized, orderly, collaborative, complementary, and win-win development pattern for the satellite communication industry, and consolidate and enhance China's competitive advantage and leading position in the information and communication industry. By 2030, the management system and policies and regulations for satellite communication will be further improved, the industrial development environment will continue to optimize, the innovation vitality of various business entities will fully burst forth, and the comprehensive development levels of infrastructure, industrial supply, technical standards, and international cooperation will be significantly enhanced. New models and new business formats such as direct satellite connections for mobile phones will be widely applied, with satellite communication users exceeding ten million, promoting the full integration of satellite communication into the new development pattern, and effectively serving the high-quality development of the economy and society.

In terms of application fields, the "Guiding Opinions" propose: accelerating the construction and application services of satellite internet systems, conducting commercial trials for low-orbit satellite communication applications in a timely manner, and achieving global broadband network coverage. It encourages providing diversified network access services to remote areas, border areas, and regions with complex terrain and climate through high-throughput satellites and low-orbit satellite internet. It encourages innovative applications of satellite communication in various industries and fields such as industry, agriculture, transportation, energy, and urban governance, strengthening the cross-integration with new-generation information infrastructure such as industrial internet, vehicle networking, airborne communication, low-altitude intelligent networking, and computing power networks, and promoting direct satellite connections for cars, ships, and aircraft Support eligible enterprises to rely on low-orbit satellite IoT constellations to provide wide-area IoT connectivity services for areas where ground networks cannot cover, such as the sky, oceans, and remote regions.

In terms of international cooperation, the "Guiding Opinions" propose: supporting enterprises to apply for international codes for satellite communications and actively expand into international markets. Optimize the global market layout, explore incorporating international cooperation in satellite communications into the frameworks of initiatives such as the Belt and Road Initiative, BRICS countries, and the Asia-Pacific Space Cooperation Organization, and encourage China's satellite communication services to "go global."

Regarding the standard system, the "Guiding Opinions" propose: jointly build an open and shared satellite communication standard system that integrates space and ground, and actively participate in the work of international standard organizations such as the International Telecommunication Union (ITU) and the Third Generation Partnership Project (3GPP).

In terms of funding support, the "Guiding Opinions" propose: fully leverage the leading role of industrial funds such as the manufacturing transformation and upgrading fund to drive social capital to support key enterprises in the satellite communication field. Encourage localities with industrial foundations and advantages to increase support and establish special funds for satellite communications.

To optimize business access, the "Guiding Opinions" propose: researching the establishment of new types of satellite communication services and further expanding access for private enterprises. Encourage private enterprises to legally and compliantly utilize various high and low orbit satellite resources through various commercial cooperation methods such as leasing satellite resources, providing value-added services, and distribution agency businesses, to activate existing satellite resources, enrich the types of services, and promote the satellite communication market. Further optimize market access, equipment network entry, and other licensing approval processes, maintain a fair competitive market order, and build a unified, open, and orderly competitive satellite communication market system.

Direct mobile connection is the development direction resonating between China and the U.S., fully opening market space for the C-end

The "Guiding Opinions" repeatedly mention "direct mobile connection," including: supporting the development of terminal device direct satellite connection services, deeply exploring the application potential of high-orbit satellites such as Tiantong and Beidou, promoting the accelerated application of direct satellite connections for mobile devices such as smartphones, and providing voice and short message services based on satellites for a wide range of ground mobile communication users. Encourage telecom operators to rely on low-orbit satellite internet to expand high-speed data services based on voice and short message services, promoting the integrated development of information infrastructure in space and on the ground. Innovate the "no card swap, no number change" model for mobile terminals, deeply explore the potential for using existing numbers, support the development of direct satellite connection applications for smartphones, and promote the deep integration of satellite communications with ground mobile communications.

Direct to cell (DTC) satellites refer to the communication method that allows ordinary smartphones to establish a communication network connection directly with satellites without going through ground base stations and satellite earth stations. Direct to cell satellites focus on public consumers using smartphones to connect directly with mobile communication satellites to obtain communication services. Compared to traditional satellite mobile communication applications, the user base for direct to cell satellite applications has expanded from industry users to public users. Broadly speaking, direct to cell satellites are not limited to smartphone terminals; other terminals such as IoT terminals, vehicle-mounted, ship-mounted, and airborne communication terminals also have a demand for direct satellite connections. Therefore, direct mobile connection directly reaches the C-end, fully opening the market space for satellite internet applications According to the communication protocols used, mobile direct connection is generally divided into three types: existing mobile direct connection, in-orbit satellite direct connection, and NTN mobile direct connection. Existing mobile direct connection means that users do not need to change their phones; the satellite system can adapt to the existing mobile phones' 3GPP terrestrial protocols or slightly modified 3GPP terrestrial protocols to complete the connection to the satellite; in-orbit satellite direct connection refers to the satellite system of the mobile direct connection satellite already being in orbit, requiring the phone to add a chip that supports the satellite system and the communication protocol of the in-orbit satellite system to complete the connection to the satellite; NTN mobile direct connection refers to both the satellite and the phone using the newly frozen NTN protocol of 3GPP to complete the connection. Since existing mobile phones and in-orbit satellites appeared before the freezing of the NTN protocol, new satellites and new phones are required. The ultimate goal of mobile direct connection is to achieve integration between space and ground, unified air interface, and unified terminals, enabling seamless switching between terrestrial networks and satellite communications.

Currently, mobile direct connection has become a development direction resonating between China and the United States.

(1) The U.S. FCC has authorized SpaceX to use the 1910-1915MHz and 1990-1995MHz communication frequency bands of T-Mobile to provide direct connection services to ordinary mobile phones that support LTE standards, allowing SpaceX to launch 840 Starlink satellites that support mobile direct connection. SpaceX aims for 7,500 second-generation satellites to achieve mobile direct connection. In June 2025, SpaceX announced the completion of the deployment of the first-generation DTC constellation, with antennas approximately 6 square meters, successfully testing functions such as SMS and video calls, and plans to launch data services in October 2025. AST plans to use larger antennas to achieve mobile direct connection, with the antenna size of BlueBird Block-1 being 64 square meters and Block-2's antenna size reaching 200 square meters, increasing the single satellite communication capacity by 10 times. AST has signed cooperation agreements with over 40 global mobile telecom operators.

(2) China has achieved a leap from technological breakthroughs to large-scale commercial use in the field of mobile direct connection. China Mobile, in collaboration with ZTE, completed the first domestic NR-NTN low-orbit satellite laboratory verification. The two major constellations, State Grid (GW) and Qianfan (G60), are expected to provide mobile direct connection-related services in the future. Huawei announced at the Mate X6 launch that the low-orbit satellite internet system is under testing and is expected to start public testing in the second half of 2025. Flagship models from Huawei, Honor, Xiaomi, Oppo, and others are expected to be equipped with satellite communication functions.

Currently, companies such as Guobo Electronics, Haige Communications, and Hwa Create have relevant layouts in mobile direct connection terminals.

On the application side, the "Guiding Opinions on Optimizing Business Access to Promote the Development of the Satellite Communication Industry" propose that "by 2030, new models and new formats such as mobile direct connection satellites will be scaled up, with satellite communication users exceeding ten million," which will fully open up the market space for satellite applications. On the satellite side, since the end of July, the speed of China's GW networking has significantly accelerated, and the "Guiding Opinions" propose to accelerate the construction of satellite internet systems. On the rocket side, several large liquid rockets, including Lijian No. 2, Zhuque No. 3, Tianlong No. 3, and Changzheng No. 12 modified, are expected to make their maiden flights within the year, which is likely to enhance launch capacity and reduce launch costs. The resonance among satellites, rockets, and applications highlights investment opportunities in the satellite internet industry chain In terms of direct mobile connections, it is recommended to pay attention to Guobo Electronics and Haige Communications; in satellite manufacturing, it is recommended to focus on CATEC, Zhenlei Technology, Shanghai Hanxun, Guobo Electronics, and Aerospace Huanyu; in rocket launches, it is recommended to pay attention to Plentiful, Srey New Materials, CATEC, Parker New Materials, and Huasu High-Tech.

Risk Analysis

1. Risk of technological breakthroughs falling short of expectations; 2. Risk of downstream demand falling short of expectations; 3. Risk of intensified industry competition