AI fuels telecom industry recovery as emerging markets lead growth – BCG

Kitso Lemo, associate director in the Telecommunications, Media and Technology (TMT) Practice at Boston Consulting Group (BCG), has said the global telecommunications industry is undergoing a major transformation driven by artificial intelligence (AI), with emerging-market operators leading a resurgence in shareholder value.

According to BCG’s latest Telco Value Creators Report, the sector is experiencing what the firm describes as a Great Recovery, with median Total Shareholder Return (TSR) rising to 9 percent, surpassing the cost of equity after years of sluggish growth.

The report found that telecom operators in emerging markets are increasingly outperforming their developed-market counterparts by evolving beyond traditional connectivity providers into digital ecosystem players.

These operators are leveraging fintech services, digital payments, and AI-powered innovations to unlock new revenue streams and strengthen customer engagement.

Among the industry’s top performers, India’s Reliance Jio led with an estimated TSR of 32 percent, followed by Bharti Airtel at 28 percent. South Africa-based MTN Group recorded about 24 percent TSR, while China Mobile and Telenor achieved approximately 22 percent and 20 percent, respectively.

Lemo noted that the strongest performers are increasingly adopting what BCG calls an ‘AI-first’ operating model, where artificial intelligence becomes a foundational element of the business rather than a standalone technology project.

In this model, AI is used to optimise networks in real time, generate personalised offers for subscribers, automate customer engagement, and enable services such as Network-as-a-Service, allowing enterprises to manage bandwidth more flexibly.

The report highlighted significant opportunities for African telecom operators, many of which have successfully expanded into financial services but still rely heavily on legacy technologies.

According to Lemo, around 80 percent of transactions across the continent continue to be conducted through USSD channels, limiting efforts to meet the expectations of increasingly digital-native consumers.

He said greater use of application programming interfaces (APIs) could help operators integrate more effectively with third-party technology providers, particularly in financial services, enabling the development of more seamless digital products and customer experiences.

To accelerate AI adoption, Lemo recommended that telecom executives focus the majority of their efforts on organisational transformation rather than technology acquisition alone.

He advocated a 10-20-70 framework, with 10 percent of resources devoted to algorithms, 20 percent to technology and data infrastructure, and 70 percent to people and process transformation.

The report also identified several trends expected to shape the telecom industry in 2026. These include the use of generative AI to create highly personalised customer experiences, the adoption of software-defined and Open RAN networks to reduce infrastructure costs, and the growing demand for sovereign cloud services that allow governments and enterprises to keep sensitive data within national borders.

BCG estimates that operators that successfully embed AI into their core operations could increase revenues by between three and five percent through improved customer acquisition and lower churn rates.

At the same time, AI-driven network optimisation could reduce infrastructure-related costs by as much as 15 to 20 percent.

Lemo said the opportunity for African telecom operators is substantial but time-sensitive, warning that companies that delay AI integration risk losing market share to more agile competitors already using technology to strengthen customer loyalty and improve operational efficiency.