Telcos Between Satellites, AI and Digital Sovereignty: How Network Strategies Are Changing

The telecommunications market is entering a phase in which connectivity will remain at the heart of operators’ businesses, but will no longer be sufficient on its own to support growth. LEO satellites, artificial intelligence, cloud, cybersecurity and computing infrastructure are reshaping the competitive landscape and pushing telcos to rethink their operating models, service portfolios and asset strategies.

This is the picture outlined by the EY-Parthenon “Telco of Tomorrow” study, based on interviews with more than 90 telecommunications executives worldwide. Expectations remain focused on growth: most executives anticipate revenue increases of between 1% and 5% over the next three years, while 16% expect growth of more than 5%.

Outlooks are more positive in markets outside Europe. At the same time, competitive pressure, regulatory uncertainty, skills shortages and financial constraints are shaping operators’ strategic decisions.

AI Becomes a Lever for Networks and Operations

One of the most significant changes concerns the way operators plan to use artificial intelligence. The objective is not only to develop new services, but also to transform internal processes and operations.

According to the EY study, 78% of executives surveyed believe AI could double efficiency levels over the next five years. The focus is particularly on network operations, commercial functions, customer management and internal processes.

For operators, the greatest potential therefore lies in automating activities, reducing operating costs and improving execution speed. Agentic AI applied to networks is also emerging as an important area, alongside more established applications of artificial intelligence in the front office.

Technology, however, is not a standalone solution. Achieving structural benefits will require operators to redesign processes, simplify architectures and measure the actual impact of automation on costs and performance.

From Connectivity to Higher-Value Services

The transformation is also affecting the scope of operators’ offerings. Telcos are paying increasing attention to activities that complement traditional connectivity.

Half of the executives surveyed now consider non-core services to be among the main drivers of growth, up from 34% in 2024. Areas highlighted include sovereign cloud, cybersecurity and AI-as-a-service, alongside more established businesses such as television and financial services.

For the wireless industry, this means combining network availability and spectrum with a greater ability to develop software- and data-driven services. Networks are becoming components of broader solutions in which data, IT capabilities and integration with technology partners also play a key role.

In the enterprise market, this evolution could translate into offerings that combine connectivity, cloud, security and computing capacity. For telcos, the challenge will be to build a recognizable market position without spreading resources too thinly across segments where other players already have established expertise.

LEO Satellites Are Increasingly Relevant to Connectivity

One of the most significant challenges to the traditional network model is also coming from space. Sixty-six percent of executives surveyed identify satellite operators as one of the main potential sources of disruption over the next five years.

Today, the relationship between terrestrial networks and satellite infrastructure is still largely based on integration, partnerships and the use of satellite connectivity as a complementary or backup solution. The expansion of low Earth orbit constellations, however, could gradually change this balance.

In particular, LEO networks could play a larger role in rural or hard-to-reach areas where terrestrial infrastructure is more difficult or expensive to deploy. Some executives surveyed believe satellites could evolve from a complementary technology into an alternative to terrestrial networks in specific scenarios.

For wireless operators, this creates a dual perspective: competition in some parts of the market and cooperation in others. Integrating terrestrial and satellite networks could become part of coverage and resilience strategies, particularly in low-density areas.

Hyperscalers Are Both Partners and Competitors

The competitive landscape is becoming even more complex with the growing presence of hyperscalers. Major technology providers are simultaneously critical partners and competitors for telcos, particularly in the business market.

Their expansion into cloud, computing and software platforms allows hyperscalers to capture an increasing share of the digital value chain. The growing demand for AI infrastructure is reinforcing this trend.

Operators therefore have opportunities to build partnerships around the combination of connectivity, computing capacity and cloud services. At the same time, competitive pressure is increasing in the segments where telcos are seeking to expand beyond their traditional business.

The result is a less straightforward relationship than in the past: the same technology company can be a supplier, an industrial partner and a competitor at the same time.

Networks Remain Essential, but Are No Longer the Only Differentiator

Network coverage and performance remain critical assets for operators, but according to the EY research they are becoming less powerful as standalone differentiators.

Customer knowledge and software capabilities are gaining importance. The ability to use data to understand customer behavior and needs can influence personalization, pricing, sales and customer care.

AI could accelerate this process by turning data generated by networks and services into actionable information for commercial and operational decisions.

The risk of increasing commoditization remains significant: 37% of executives believe telcos could struggle to differentiate themselves meaningfully from one another five years from now.

In this environment, networks remain the enabling infrastructure, but competitive advantage is increasingly linked to the ability to combine them with software, data, services and customer insight.

Budget and Skills Shortages Slow Modernization

The sector’s digital transformation is facing financial and organizational constraints. Fifty-four percent of respondents identify budget limitations as one of the main obstacles, while 43% point to a lack of skills.

For telcos, the challenge is particularly acute in areas such as software, IT, data, AI and digital infrastructure management. Transformation therefore requires a combination of upskilling existing employees and recruiting new talent.

Only 31% of executives surveyed believe telecommunications will rank among the most attractive industries for workers over the next five years.

Technology debt is another factor. Legacy systems, layered platforms and processes developed over many years can slow the adoption of new technologies and make automation more difficult.

This means AI deployment cannot be separated from IT modernization. Automating inefficient processes without redesigning them could limit the benefits that operators are able to achieve.

Networks, Towers and Assets: Consolidation Returns to the Agenda

The transformation is also affecting asset strategies. Expectations around the widespread adoption of netco-servco models are more cautious than in previous years, while attention is increasingly shifting toward consolidation and M&A opportunities.

Network separation remains an option in several markets, but operators appear more cautious about the complexity involved in managing separate entities and integrating them into broader business models.

For the towers and passive infrastructure sector, this trend is particularly relevant in a market where efficiency, asset sharing and the ability to support new investment cycles remain key priorities.

M&A transactions, moreover, are not simply about acquiring assets or companies. The actual value of a deal depends on the ability to integrate systems, processes, commercial platforms and operating models while maintaining continuity in customer relationships.

Digital Sovereignty, Cloud and Cybersecurity Gain Strategic Importance

The geopolitical environment is also influencing operators’ decisions. Greater market fragmentation and regulatory changes are increasing investment uncertainty, while simultaneously highlighting the strategic importance of digital infrastructure.

In this context, digital sovereignty, sovereign cloud, cybersecurity and AI infrastructure are emerging as areas where telcos can identify new opportunities.

Networks, data centers, relationships with companies and public authorities, and experience in managing critical infrastructure can provide operators with a foundation for developing new services.

Diversification, however, requires selectivity. Entering new markets without distinctive assets or capabilities could expose operators to competition from hyperscalers, software companies and cybersecurity specialists.

Technology partnerships are therefore likely to become increasingly important. The objective is to build solutions in which connectivity, cloud, security and computing capacity are integrated into a single proposition, particularly for enterprise customers and public-sector organizations.

Execution Will Be the Key Challenge

The EY study points to an industry where technological opportunities are multiplying, but where turning them into growth and profitability will depend heavily on execution.

For operators, priorities will include improving operational efficiency, modernizing IT infrastructure, protecting the core connectivity business and identifying new growth areas without spreading capital and skills too thinly.

AI could become one of the elements connecting these priorities, from automated network management and data analytics to service personalization and support for commercial activities.

The non-core business is also expected to change significantly. Fifty-five percent of executives surveyed believe that the way companies generate revenue outside traditional connectivity will be fundamentally different five years from now.

For the wireless sector and the broader telecommunications infrastructure ecosystem, transformation will therefore depend on the ability to bring networks, towers, software, data, cloud, AI and partnerships together.

Technology is expanding the range of possibilities. The ability to turn those opportunities into sustainable operating models will shape the sector’s trajectory over the coming years.

 Wireless & Towers 2026, taking place from 7 to 9 October 2026 at BolognaFiere, is the first international trade fair and conference in Southern Europe dedicated to transmission towers, telecommunications infrastructure, technologies and equipment, broadcasting, satcom, geospatial technologies, security, smart cities, emergency response and territorial management.

The event is part of the new European exhibition hub Urban Tech 2026 – The Urban Technology Show, covering e-mobility, traffic, commuting, security, telecoms & data, and the environment.