The three telecom companies will kick off earnings season starting with China Mobile in mid-August. Misek's estimates are above consensus on China Unicom in both revenue and profits, and basically in line with the Street on China Mobile and China Telecom.

Misek expects China Mobile's total telecom service revenue to grow 8.6 percent year-over-year and profit to increase 3.4 percent year-over-year.

Misek projects China Telecom's total adjusted telecom services revenue to grow 7.1 percent year-over-year and adjusted net profit to increase 12.7 percent year-over-year. He expects China Unicom's total telecom service revenues to grow 11.7 percent year-over-year and profit to decline 61.6 percent year-over-year.

The China's Ministry of Industry and Information Technology reported capital expenditure came in at 47.5 percent of Misek's full year capital expenditure estimates. He expects second half spending to accelerate versus first half of 2011.

"Upcoming catalysts are positive. We hold the view that upcoming mass market smartphone availability will help accelerate Unicom's mid-tier 3G migration. In addition, the iPhone 4S introduction in fourth quarter helps solidify its handset portfolio leadership among high-end users; both of which are positive catalysts for China Unicom," said Misek.

Misek said China Unicom's valuation at the current level is attractive at 4.8 times of forward fiscal 2012 equity value/EBITDA, a 17 percent discount to the regional peer group average.

Misek said China Telecom's valuation has moved up in recent weeks on CDMA iPhone related news flow; however, its 6.3 times of forward fiscal 2012 equity value/EBITDA is a 9 percent premium to regional peers.

"We see more upside from Unicom. We do not see the likelihood of accelerated LTE licensing at the three telecom companies and maintain our Hold rating on China Mobile (CHL) despite its low valuation compared to regional and global peers," said Misek.