AI spurs telecom expansion in Asia-Pacific

Asia-Pacific telecom operators are shifting focus from building 5G networks to profiting from them, with artificial intelligence becoming a major factor in future expansion, according to a recent sector outlook.

Moderating capital spending opens new opportunities

Capital expenditures have declined after years of heavy investment in 5G infrastructure, which peaked in 2022-23. Telecom companies are now redirecting funds toward enterprise services, fixed wireless access, cloud computing, cybersecurity, and AI-related infrastructure.

The region is expected to reach 1.5 billion 5G connections by 2030, making up half of all mobile subscriptions in APAC and about a quarter of the global total. With network rollouts nearly complete, operators face pressure to generate returns from their investments.

A midyear outlook for 2026 describes the sector as stable, with modest earnings growth anticipated despite fierce competition in many markets. Rising demand for mobile data, enterprise applications, and fixed broadband supports this stability, reinforcing telecom’s role as an essential service.

AI and data centers take center stage

The biggest growth opportunity lies in AI. Telecom providers are positioning themselves as key players in the AI ecosystem, collaborating with hyperscalers and equipment vendors to build autonomous, intent-driven networks.

“The AI ecosystem represents the convergence of telecom service providers, hyperscalers, and equipment vendors to create autonomous, intent-driven networks,” the report states. “APAC telecom operators are well positioned to capture future growth driven by the surge in demand for AI infrastructure and management services.”

Operators are also investing in cybersecurity to protect networks and customer data, as breaches can cause severe financial and reputational harm. Innovation in AI, cloud, and security aims to reduce subscriber churn and improve profit margins.

The challenge for telecom companies isn’t just keeping pace with technology. They must decide where to invest. Those that integrate AI into their business models may gain an advantage, while others risk falling behind in a sector where differentiation is difficult.

The shift varies across the region. Some markets remain dominated by a few large incumbents, while others are more fragmented. The broader trend is clear: operators that treat AI as a core part of their strategy are more likely to see lasting growth.

Geopolitical risks loom, but earnings remain stable

Despite geopolitical tensions, particularly in the Middle East, the outlook for APAC telecom remains neutral to slightly positive. The sector’s essential nature provides some protection against economic volatility, though individual companies’ performance will depend on how well they adapt to new technologies.

Disciplined investment is expected to keep capital intensity manageable, even as spending on data centers and AI infrastructure increases. Selling non-core assets could free up additional capital, helping operators balance shareholder returns with long-term growth.

“Beyond traditional connectivity services, becoming a meaningful player within the artificial intelligence ecosystem is emerging as a key differentiator,” the report notes. “Success will depend on their ability to pursue and monetize growth opportunities.”

That ability will be tested soon. With 5G adoption accelerating and AI demand rising, telecom operators have a limited window to reposition themselves—not just as connectivity providers, but as enablers of the next wave of digital transformation.