Telecoms operators will battle for position as their infrastructure capex is dwarfed by spending on AI

Telecoms operators’ traditional role as builders of public digital infrastructure is being eclipsed by hyperscalers. With a smaller share of capex than has traditionally been the case, operators will focus on the assets they can monetise.

Currently, over 40% of global capex on public digital infrastructure – from access and transport networks to data centres, cell sites and communications satellite infrastructure – comes from telecoms operators, but this will fall to 35% in 2026 and continue to decline. Between 2021 and 2031, capex investments in digital infrastructure by telecoms operators and infracos will have fallen from USD350 billion to USD259 billion, at a compound annual growth rate (CAGR) of –3%.

However, these figures disguise some important changes in investment patterns. Some telecoms operators will refocus on services rather than infrastructure investment. Those that continue to build networks and data centres will do so in a very different way: focus will shift from ubiquitous coverage towards localised connectivity; and from access networks towards transport, interconnect and cloud infrastructure. Telecoms capex on transport and cloud networks will rise at a CAGR of 5% in the decade from 2021.

What is reshaping telecoms operators’ infrastructure investment strategies?

First, a massive amount of new investment is going into digital infrastructure, but it is fuelled principally by the evolving AI technologies such as generative AI.

The new AI-enabled data centres will have a bearing on connectivity needs, but current infrastructure investments are principally outside telecoms operators’ core areas. The prevailing trends will therefore lead to a significant change in telecoms operators’ position regarding the build-out and ownership of public infrastructure.

Some operators will build AI-enabled data centres and contribute to the overall expansion of these capabilities. For instance, SoftBank and SK Telecom are making major investments in Asia, while Deutsche Telekom and Orange are among the European operators co-investing with NVIDIA, as well as being partners in the European AI GigaFactory project. Analysys Mason’s Cloud and AI infrastructure forecast predicts that investment in this AI-specific infrastructure by (fixed and mobile) telecoms operators will grow 250% between 2024 and 2030, at a CAGR of 17%, to reach USD16.6 billion in 2030.

However, this is a drop in the ocean of total global investment in AI infrastructure, which will be dominated by non-telecoms operators such as hyperscalers. To stay relevant in the value chain, most telecoms operators will focus on aspects of AI infrastructure where they have natural strengths, particularly in addressing the AI-driven requirement for more data-centre interconnect.

The second factor influencing operators’ investment in infrastructure is the decline in traffic growth, and the reduced need for network upgrades.

Fibre networks are as close to completion as is economically viable in some markets and have sufficient capacity to last for decades.

On the mobile side, global cellular traffic growth, excluding Wi-Fi, hit 87% at its peak in 2018, but has fallen to around 14% in 2025 and is projected to drop below 12% in 2026. This upends the convention that mobile operators must invest in a new generation of technology every decade in order to provide the necessary ten-fold increase in capacity. So far, operators report that rising use of AI is not reversing the decline in traffic growth, except in data-centre interconnect (DCI).

Furthermore, massive capacity is required on a localised basis for many sites and applications, and fibre networks can support these high-capacity applications at fixed locations. However, as cloud and AI services increasingly move to handheld devices, capacity crunches can emerge in specific hotspots of usage such as sports venues, campuses and industrial parks.

Cellular network operators see significant potential in such environments, creating demand for new revenue-generating services. To capture this opportunity, operators must invest in capacity selectively, and in sophisticated tools to map and predict footfall. Capex will focus on high-value locations that will enable new services and attract partners such as hyperscalers or enterprise service providers.

Telecoms operators are seeking a new position in the emerging, more complex infrastructure value chain. 2026 will see an intensification of trends such as delayering, hyperscaler partnerships and co-investment with wholesale players. Telecoms operators will be left with a smaller share of capex/ownership than they have traditionally had, but with a greater focus on assets they can monetise.