Telcos face valuation gap as AI promises margin lift

BCG projected a 3% annual revenue increase for the largest listed telco operators.

Telecommunications have lagged most sectors on revenue growth and total shareholder return over the past five years, and forecasts for the largest listed operators imply a median 3% a year revenue rise over the next three years, ranging from -3% to 11%, according to a 2026 report by Boston Consulting Group (BCG).

Total shareholder return (TSR) lagged over the past five years, reflecting investor concerns that operators risk being left behind as value shifts towards digital platforms and intelligence layers built on top of connectivity.

BCG identified the AI-First Core Telco model as the mandatory foundation for repositioning, requiring predictive care, next-best-action customer management, intelligent automation, and dynamically allocated network capacity to create a self-learning network. 

Companies pursuing this shift could see meaningful early wins within 12 to 18 months, depending on the scale of transformation.

Beyond core efficiency, the firm outlined three additional growth paths in consumer AI monetisation, enterprise AI convergence, and sovereign AI infrastructure. Global enterprise AI spending is projected to surpass $400b by 2027, whilst the data centre market is projected to exceed $400b by 2028.

Examples cited include SK Telecom’s AI-driven personal assistant, which has surpassed 10 million monthly active users, and Singapore’s Singtel, which is developing AI-ready data centres and launching graphics processing unit-as-a-service platforms through its Nxera brand in partnership with Nvidia.