Forrester says telecoms turn to AI to revive growth

Forrester has published research showing telecom operators are turning to artificial intelligence to revive growth. It describes AI as a major opportunity for communications service providers facing weak revenue expansion.

The findings come as the sector contends with projected annual revenue growth of 0.3% between 2024 and 2027 and largely flat margins. Against that backdrop, operators are looking beyond basic connectivity services for new sources of income.

The research says telecom groups are increasing spending on AI infrastructure while applying AI across networks, IT systems and day-to-day operations. The goal is to expand their role in the digital economy, moving beyond traditional voice and data services into areas such as data centres, GPU compute, cybersecurity and AI-based services for business customers.

That shift reflects broader industry concern that connectivity alone has become too commoditised. Operators are trying to avoid repeating earlier periods when many were slow to capture value from the rise of streaming platforms and cloud computing.

Forrester argues the current AI cycle is different because telecom groups are not just buying technology but trying to establish themselves as infrastructure providers in domestic markets. In several countries, that strategy also aligns with national priorities around local data handling, digital resilience and sovereign technology development.

Investment push

The research identifies large-scale investment in AI infrastructure as one of the main forces reshaping competition in telecoms. Operators are building local AI ecosystems shaped by data sovereignty requirements and geopolitical pressures, while seeking to compete more directly with hyperscale cloud companies and other established AI suppliers.

These investments are framed not only as a growth play but also as a defensive move. If operators remain focused mainly on access services, they risk being squeezed by rising costs and limited pricing power, especially as data traffic grows and customer expectations increase.

In the Asia-Pacific region, the report identifies rapid digital transformation and heavy infrastructure spending as key drivers of this change. India and Singapore are highlighted as markets expanding AI capacity, supported by public and private sector efforts to strengthen digital competitiveness.

Across the region, operators are also using AI to shorten product development timelines, improve service delivery and sharpen operational performance. That makes APAC an important testing ground for how telecom companies can apply AI in both customer-facing and internal functions.

Operational gains

Forrester says some of the clearest evidence of early returns is emerging in network and operations work. The research cites examples of AI-led processes reducing energy use by as much as 35%, speeding up network issue detection by 80% and cutting high-severity incidents by 94%.

Such figures matter because the industry has long struggled to balance capital intensity with limited top-line growth. Better network reliability and lower operating costs offer one of the most immediate financial cases for AI adoption, even before any new service revenues become material.

The report also says autonomous networks are moving closer to practical use. While most operators still run at only partial autonomy, AI-based orchestration and agentic systems are making self-healing and real-time network optimisation more realistic near-term goals.

That could reshape both operating models and customer service. A more automated network environment would reduce the need for manual intervention and support what the industry often describes as zero-touch experiences, where faults are identified and addressed with little or no human action.

Ecosystem model

Forrester argues that success will depend less on experimental pilots and more on whether operators can build workable ecosystems around AI. That includes governance, staff with cross-functional expertise, and partnerships with cloud providers, technology vendors and software developers.

The emphasis is increasingly on production-ready deployments and measurable outcomes rather than abstract innovation goals. For operators under pressure from investors and rising costs, the key test is whether AI can deliver clear savings or sustainable new revenue.

Tom Mouhsian, Principal Analyst at Forrester, said telecom groups see AI as a chance to avoid being sidelined again by a major technology shift.

"Many CSPs admit having missed prior opportunities during the rise of OTT (e.g., streaming services) and cloud computing and feel concerned that their traditional value proposition anchored in network connectivity (e.g., voice and data) is too commoditized," Mouhsian said.

He added that operators are responding by taking a more assertive role in AI infrastructure.

"That's not something they want to repeat during the AI boom. In fact, dozens of well-known CSPs around the world are boldly entering the AI infrastructure race, challenging the established AI 'picks and shovels' companies (e.g., chipmakers and hyperscalers)," Mouhsian said.