Telecom evolution: How telcos are expanding their digital services to drive new growth

The telecommunications industry, long the backbone of digital connectivity, is no longer confined to traditional communication services. Today, telecom companies are evolving into integrated technology providers (“techcos”) and core hubs for industry convergence.

Faced with growing competition in a mature market as communication services are increasingly commoditized, telecoms are expanding their portfolios with new digital services to drive growth.

Several trends are driving this telecom evolution, including technological advancements, new business models, and the need to create more value for customers in an increasingly interconnected world.

Let’s look at some examples of telcos making the change and best practices for a successful transition.

New ventures: Telecoms branching out  

Telecom companies are expanding their role by integrating technology and services across various sectors. For instance, a leading Asian telecom firm’s acquisition of a large IT professional services company enabled it to reposition itself as a provider of comprehensive information, communication, and technology (ICT) solutions.

In another example, a U.S.-based mobile operator adapted to consumer demands through retail innovations like “buy online, pick up in-store” (BOPIS), increasing customer engagement and streamlining operations.

Beyond these strategies, telecom companies are also venturing into manufacturing, as seen with a global telecom giant producing low-cost smartphones to meet customer demands.

This evolution reflects a broader trend of telecom companies moving from hardware-driven systems to software-defined networks, enabling them to offer full technology ecosystems and network-as-a-service (NaaS) solutions.

Integrating industry ecosystem best practices

To thrive in this new digital landscape, telecom companies are increasingly adopting best practices that emphasize collaboration and innovation across industry ecosystems. IDC described three main practices in a recent report:

1. Digital twins for better collaboration: By using digital twins of assets, processes, and people, telecom companies can work in a blended physical and digital environment. Sharing these digital profiles with ecosystem partners allows for real-time collaboration and visibility into performance. For example, sharing customer digital twins can streamline supply chains, and improve service delivery, driving greater efficiency across the ecosystem.
2. Marketplaces as ecosystem hubs: Marketplaces have become key components of industry ecosystems, offering a digital space for participants to share knowledge, engage in commerce, and co-innovate. Telecom companies can use these platforms to collaborate with partners on data models, jointly train AI models, and develop new products. The integration of foundational large language models (LLMs) and domain-specific AI tools is becoming increasingly important for collaboration and innovation.
3. Support sustainability: Environmental sustainability is a priority across industries. By leveraging collaborative ecosystems, telecom providers can address complex sustainability challenges, such as advancing the circular economy, and improving energy efficiency. Working together, partners can meet regulatory demands and customer expectations while achieving internal sustainability goals.

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The role of AI in telecom evolution

AI is a driving force behind many of the advancements that enable telecom companies to evolve into technology providers. AI-driven solutions are  helping them optimize network performance, automate customer interactions, and create personalized experiences that boost customer loyalty.

Additionally, AI-powered revenue management tools are helping telecom providers to quickly leverage their vast amounts of data to maximize content value and optimize resource allocation.

An NVDIA study found that 56% of approximately 400 telecom professionals polled view AI as important to their company’s success. Fifty-three percent believe AI will be a source of competitive advantage.

Customer experience is the top AI opportunity for telcos with 48% of telco pros saying improving CX is their main goal of investing in AI, according to NVDIA.

AI is helping telecoms deliver new network-as-service offerings that partners can build on, and business networks that support sustainability monitoring and compliance.

Innovation through cross-industry capabilities

In order to evolve successfully into integrated technology providers, telecom companies must embrace cross-industry capabilities. This involves leveraging advanced business solutions that go beyond traditional telecom tools.

Platforms supporting everything from core financial operations to enterprise asset management can drive efficiencies, helping to reduce costs and open up new opportunities for growth.

By integrating AI, digital twins, and collaborative marketplaces, telecom companies can differentiate themselves in a crowded market, foster innovation, and expand their role in the digital economy.

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Telecom evolution: Positioned for growth

By moving beyond connectivity and adopting integrated technology solutions and best practices, telecom companies are positioning themselves as key players in a converging digital world.

As they continue to innovate and collaborate across ecosystems, these companies are shaping the future of the digital economy by discovering new avenue for growth and sustainability.