Even as the role of telecommunications companies remains indispensable, growth in traditional fixed and wireless networks has plateaued. Core connectivity is still essential, but value is increasingly migrating upward, toward the digital platforms and intelligence layers built on top of it.
Despite decades of investment and reliable cash flow, few telcos have translated their infrastructure advantage and rich customer data into new engines of value. But the first signs of reinvention are emerging, with some early movers showing what a different future could look like. In South Korea, SK Telecom is creating an AI-powered “platform company,” and Singapore’s Singtel is building regional AI-ready facilities, while both Verizon and AT&T in the US are embedding generative AI (GenAI) across operations and customer service.
These early moves to go beyond connectivity suggest a promising start, but the defining challenge lies ahead: to reimagine what it means to be a telco in an AI-driven world, and to scale that vision to a new AI-centric reality. Telcos with the vision and conviction to act can harness this changing landscape for renewed growth. The opportunity is clear, and doing nothing is not an option.
This article explores how telcos can reposition themselves for renewed relevance in the next wave of transformation. We analyze the structural shifts underlying the transformation and the strategic choices available to telecom company leaders. Finally, we outline the key considerations for leaders in executing on their strategic ambitions and turning them into reality.
Telcos at a Tipping Point: Four Main Trends Shaping the New Ecosystem
Over the past five years, telcos have lagged nearly every other technology sector in both revenue growth and total shareholder return. (See Exhibit 1.) Investors are discounting the sector, with enterprise multiples of just five to seven––far below those of data center and cloud providers, which command multiples closer to 20. This valuation gap underscores the belief among investors that without fundamental change, telcos risk being left behind in the digital value chain.
Indeed, the sector’s long-standing operating model, built on control of spectrum, infrastructure, and customer relationships, is being challenged on all fronts. The world’s digital infrastructure ecosystem is undergoing a profound shift as a wave of new technologies and business models redraws the boundaries of the telecom industry. Consider the following trends.
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AI Is Rewiring the Telco Core
AI is fast becoming the control system of the modern telecom network. Across the industry, leading operators are deploying autonomous network systems capable of self-optimizing traffic, predicting failures, and managing energy use in real time.
Global network investments are increasingly being redirected toward AI-driven automation, signaling that intelligence and not capacity is the new currency of performance. AI is also reshaping the customer experience as operators embed GenAI models into digital assistants and intelligent service channels, helping operators move from reactive to anticipatory engagement.
AI is reshaping the customer experience as operators embed GenAI models into digital assistants and intelligent service channels.
Rise of Data Centers, AI Clusters, and Sovereign Clouds
In the new ecosystem, data centers, AI clusters, and sovereign cloud programs are becoming the backbone of global computing capacity.
Growing nearly 10% annually, the data center market is projected to exceed $400 billion by 2028, driven by surging demand for high-density computing and AI workloads. Hyperscalers such as AWS, Microsoft, and Google are investing tens of billions of dollars to build AI-optimized data centers, while players such as OpenAI and Nvidia are focusing on purpose-built AI clusters.
The new infrastructure race is as much about sovereignty as scale. More than 100 data localization measures across 40 countries now regulate where and how data can move. Governments are seeking residency, transparency, and regulatory-grade AI inference, and increasingly favor neutral and sovereign infrastructure providers to deliver it. Taken together, these trends mark a structural shift in who holds the keys to digital infrastructure and who is trusted to secure it.
Network-as-a-Service and the API Play
The shift to software-defined and cloud-native architectures is creating demand to expose network capabilities such as identity, security, and quality of service through standardized APIs. The goal is to make connectivity programmable and consumable on demand for enterprise users. Leading hyperscalers are moving quickly. Amazon’s AWS Wavelength, Microsoft’s Azure Programmable Connectivity, and Google Cloud’s Telecom Network Automation all enable developers to embed network performance features directly into applications.
The goal is to make connectivity programmable and consumable on demand for enterprise users. Leading hyperscalers are moving quickly.
The promise is significant, but the model remains nascent. Most operators are still testing monetization paths, developer engagement models, and the nature of commercial ownership. Global telecom industry revenues from network APIs are estimated to reach somewhere between $30 billion to more than $300 billion by 2030—the wide range underscoring both the uncertainty and the potential of this emerging market.
Shifting Frontlines of Customer Engagement
AI is redefining how consumers connect, communicate, and consume digital services. The rapid proliferation of on-device intelligence—by 2026, nearly three-quarters of Android devices will ship with embedded AI assistants—is fundamentally changing how customers engage, interact, and discover new services.
These assistants will now sit at the top of the digital stack, mediating every user request and curating which brands and services are surfaced. In doing so, they will become the new gatekeepers between telcos and their customers, controlling not just traffic flows but also attention and trust.
To compete in this environment, telcos must move beyond selling connectivity to orchestrating intelligent, context-aware experiences, and thus reclaiming relevance in an ecosystem increasingly shaped by AI intermediaries.
Four Paths to Strategic Relevance
To unlock the next wave of growth, telcos must deploy one or more of a set of strategic plays that align with their ambition, assets, and technical maturity. Each play targets a specific source of competitive erosion: operational inefficiency, disintermediation, dependence on hyperscalers, and loss of customer ownership. (See Exhibit 2.) The first is mandatory; the others dependent on capabilities and circumstances.
The goal: to reconnect operators to the engines of value creation now shaping the connectivity ecosystem. None is a guaranteed win, but telcos that act with purpose and pace will shape the outcome.
AI-First Core Telco: the Must-Do Play. This is a thorough reshaping of the telco’s inner workings, redefining how networks run, how customers are served, and how decisions are made.
Operators looking to carry out this mandatory strategy must move on four fronts:
- Leverage AI-driven predictive care and virtual assistants to handle routine requests.
- Enable proactive customer management with next-best-action models.
- Build intelligent automation and closed-loop analytics models that turn the network into a self-learning, self-healing system.
- Develop dynamically allocated network capacity and energy.
The AI-First Core Telco strategy is about running the telco as an intelligent system that learns and improves continuously. The goal is a leaner, smarter core that generates new capacity for reinvestment.
Several telcos already apply this strategy. Some have begun with select use cases such as the customer experience or network automation. Others have defined more holistic core AI strategies and are now implementing their roadmap on a step-by-step basis.
The payoff is tangible. Our analysis shows that telcos moving in this direction can realize EBITDA gains of 5 to 15 percentage points. The total investment and payback period depends on the size of the telco’s operations and the scope of its transformation, but companies could see meaningful early wins as soon as 12 to 18 months.
AI Monetization in B2C: the Experience Play. As GenAI embeds itself into consumers’ everyday lives, telcos have a timely opportunity to deepen loyalty through hyperpersonalization at scale and become a front-end differentiator, shaping consumers’ discovery and engagement through AI-native offerings.
Potential offerings could include:
- Add-ons powered by insights into customer data, such as discounted roaming offers based on location and personalized access to learning platforms.
- AI-powered personal assistants for consumer lifestyle management, such as smart home automation and energy management based on location data.
- Personalized content and commerce ecosystems that recommend entertainment, devices, and services through extended partner ecosystems.
The returns on this strategy can be swift: higher average revenue per user, lower churn, and improved customer satisfaction. But the real prize for telcos is the increased customer loyalty and greater long-term relevance as they become intelligent digital companions deeply woven into consumers’ daily digital journeys.
The real prize for telcos is the increased customer loyalty and greater long-term relevance as they become intelligent digital companions deeply woven into consumers’ daily digital journeys.
SK Telecom’s AI-driven personal assistant, called “A.” (pronounced A-dot) has already surpassed 10 million monthly active users, showing how telcos can move beyond connectivity to owning moments of intent and interaction.
AI Convergence Telco: the Enterprise Growth Engine. Enterprise demand for telco services is shifting from raw connectivity to secure, data-driven, and AI-enabled solutions. This play reimagines telco operators as end-to-end digital partners. Global enterprise AI spending is projected to surpass $400 billion by 2027, much of it tied to connectivity, edge computing, and security.
For telcos, this opens up a broad portfolio of potential high-value offerings:
- AI-optimized connectivity, delivering dynamic bandwidth and latency management for critical workloads.
- Industry-specific solutions, such as predictive maintenance for manufacturing, smart-grid automation for utilities, and computer-vision security for retail and logistics.
- Cloud and edge integration services, enabling secure data movement and localized AI inference.
- Cybersecurity and compliance AI, using intelligent monitoring and anomaly detection to protect digital operations.
France’s Orange has systematically combined partnerships, targeted M&A, and internal platform build-out to move beyond connectivity. Through acquisitions like Orange Cyberdefense, deep partnerships with Google Cloud and Microsoft, and the scaling of Orange Business as a managed services platform, the company is positioning itself as a trusted, end-to-end digital partner for enterprises.
Such offerings create recurring SaaS-like revenues with higher margins. For operators with strong B2B customer bases, this play offers strategic repositioning, anchoring them within the enterprise digital stack.
Sovereign AI Infrastructure Partner: the National Champion Play. As governments seek secure, compliant environments for AI workloads, telcos are uniquely positioned to deliver on this vision. They already manage critical national infrastructure, operate under strict data-privacy regimes, and maintain carrier-grade connectivity and edge locations. Their extensive physical footprints provide a logistical edge, while already-deep relationships with regulators and policymakers enable telcos to navigate compliance with credibility and speed.
Telcos can deliver a full sovereign AI infrastructure stack that includes:
- AI-ready data centers designed for high-density computing.
- Graphics Processing Unit-as-a-Service (GPUaaS) platforms offering elastic AI computing to governments and enterprises.
- Trusted connectivity and compliance APIs to ensure data residency, encryption, and auditability of the AI model and output.
- Edge-computing hubs that support secure, low-latency AI inference.
This play suits capital-strong incumbent telcos and operators with national scale, offering them a chance at renewed strategic relevance by owning the computing backbone of the country’s AI economy.
Singapore’s Singtel is already pursuing this path, positioning itself as Southeast Asia’s sovereign AI hub through its Nxera brand, which is developing AI-ready data centers and launching GPUaaS in partnership with Nvidia.
Choosing Where to Play
These strategies are not mutually exclusive, but each differs in ambition and execution complexity. Together, they form an integrated defense-and-growth roadmap. Becoming an AI-First Core Telco is the non-negotiable foundation, while identifying select bold strategic adjacencies at the edge will allow operators to capture value in a platform-led digital economy.
As telcos choose which upside opportunities to pursue, it is important to perform an in-depth analysis across three key dimensions:
- Market context in which they operate—include demand signals, ecosystem dynamics, and regulatory tailwinds.
- Aspiration and level of ambition—define whether the telco will be an innovator or fast follower, the amount of financial headroom available, and the degree of risk appetite.
- Assets and capabilities—include structural advantages such as metro data centers, fiber networks, technology readiness, and commercial alliances.
Winning at each play requires distinct ingredients. (See Exhibit 3.) The B2C strategy demands a strong partner ecosystem, intuitive consumer experience design, and the ability to responsibly mine insights from data at scale. The enterprise play requires a significant portion of enterprise customers, strategic alliances with cloud, cybersecurity, and software players as well as consultative go-to-market capabilities. And the sovereign infrastructure effort calls for deep capital, operational discipline, trusted government relationships, and the ability to run high-density, high-availability digital infrastructure.
Like the imperative AI-First Core Telco, all these strategies rely on developing a culture that embraces and thinks AI across domains. This includes attracting and retaining the necessary AI talent. Telcos will need to invest in positioning themselves as technology employers. That means creating a brand and an operating environment that can attract top AI engineers, data scientists, and machine-learning experts, and developing an AI-first culture.
Telcos will need to invest in positioning themselves as technology employers. That means creating a brand and an operating environment that can attract top AI engineers, data scientists, and machine-learning experts, and developing an AI-first culture.
The most ambitious leaders will hedge, both strengthening the core with AI efficiency and testing one or two high upside plays that position them for long-term relevance.
Creating the Future of the Telco Industry
The next phase of telco value creation will not be won by making incremental changes, but through the well-planned and disciplined execution of a carefully thought-out strategy for tapping into this once-in-a-decade opportunity.
Telcos that move first, re-architecting their stack, operations, culture, and technology around intelligence, will set the pace for the industry. The winners will be those that make bold investments, blending customer centricity with ecosystem partnerships and that experiment courageously ahead of regulatory and competitive shifts.
By 2030, leading telcos will no longer be defined by their networks alone but also by their role as intelligence orchestrators across connectivity, data, and cloud. Those that act now will not just participate in the AI economy—they will define it.
