Artificial Intelligence in Telecommunications 2025

1 The telecommunications industry forms the backbone of global communications, with data consumption expected to increase from 3.4 million petabytes (PB) in 2022 to 9.7 million by 2027.1 In 2024, industry revenues reached $1.6 trillion,2 driven by integrated communication service providers (CSPs) that manage both network operations and customer-facing services, alongside an increasing number of specialized companies – network companies (NetCos) focused on network operations and service companies (ServCos) focused on customer-facing services across fixed and mobile providers. The commoditization of communication services has led to stagnating global revenues (with some regional exceptions), with a 0.3% compound annual growth rate (CAGR) forecasted from 2024 to 2027.3 While cost efficiency initiatives have helped to maintain consistent earnings before interest, taxes, depreciation and amortization (EBITDA) margins (32% in 2019 vs. 32.5% in 2024),4 the industry is struggling to improve margins due to persistent revenue headwinds and intense competition. Meanwhile, heavy infrastructure investments, especially in 5G and fibre, have limited investment capacity in new growth initiatives and contributed to an increasing debt-to-equity ratio (13.5% up since 2019 to reach 147.6% in 2024).5 Consequently, CSP market capitalizations have only grown by 7% since 2018 versus digital platforms’ 230% and S&P 500’s 172%.6 To reverse these trends and return to growth, the industry is focused on freeing up resources to reinvest in new technologies and business models. AI is emerging as a critical enabler to address these challenges and unlock new growth. AI is not new to telecommunications. Traditional, predictive AI and machine learning (ML) – collectively referred to as “traditional AI” in this report – have already laid the foundation for efficiency improvements and automation. The emergence of genAI is amplifying these capabilities and has sparked renewed excitement, with 66% of telco AI professionals across CSPs, hardware or software providers having planned to increase their AI budgets in 2024 and 90%7 of them assessing, piloting or using AI in production. CSPs are also using AI to manage rapidly escalating operational complexity – such as managing multi-vendor architectures, countering AI-driven cyberattacks and delivering personalized self-service. As the industry faces a pivotal inflection point, telecommunications companies must prioritize a set of strategic imperatives. These imperatives will not only address immediate pain points like operational complexity and revenue stagnation but also set the stage for long-term resilience and growth.1.1 ContextContext and industry imperatives The telecommunications sector must actively pursue innovative technologies and business models to revitalize revenue growth and improve profitability. of telco AI professionals planned to increase their AI budgets in 2024.66% 6 Artificial Intelligence in Telecommunications