What does value investing buy? My answer is one line: platforms. Nothing stays hot forever unless you own the platform. Apple owns the phone platform, Coca-Cola owns the beverage platform, Visa and Mastercard own the payment platform. Nobody really invests in whatever IP happens to be hot this season.
The concrete version: it doesn’t matter whether your road is smooth. The road can be full of potholes — as long as the tollbooth is on it and yours is the only road, people still pay the toll.
Here’s how the theory plays out with China Telecom. Electricity is cheap but can’t be exported — so turn electricity into tokens: AI inference is compute going overseas, and the submarine cables are its tollbooths. I treat Telecom as an AWS that owns its own power grid.
Someone will say platforms expire too — Nokia was a platform once. True, so the tollbooth theory carries a hidden clause: what you charge for is not the road; it’s “the only road.” Test it by substitution intent — Nvidia is hard to replace, but everyone wants to replace it: that’s a temporary tax. WeChat is hard to replace, and nobody dares try: that’s permanent rent.
So don’t ask whether the company’s product is brilliant. Ask how many forks that road has.
