Telco AI: State of the Market

Many AI announcements in Q1 2026 focused on telecoms operators and partners building out sovereign capabilities to satisfy national requirements around data residency, compute and LLMs. Meanwhile, investment in agentic AI build-outs has extended beyond networks and software to machines, drones, cars and other industrial assets – so-called ‘physical AI’. As well as recent developments from the telco AI space and the Telco AI tracker, this edition provides a deep dive on the implications of the growth of on-device AI.

The key change over the last six months has been telecoms operators using AI in their product portfolios to enhance commercial efforts, particularly with enterprise segments. In the US alone, 50% of the new AI deployments since June 2025 have had a revenue objective. As well as recent developments from the telco AI space and the Telco AI tracker, this edition also provides a deep dive on AI's contribution to operator energy consumption.

While AI rollouts focused on saving money still account for the bulk of deployments, there is a growing movement towards using AI with a revenue objective.

If 2024 was about establishing the strategic rationale for AI, 2025 is about assessing progress. To this end, GSMA Intelligence has evolved this research series to establish a baseline that can be tracked over time for the industry, its supply chain and partnership ecosystem. As well as recent developments from the telco AI space and the Telco AI tracker, this edition provides a deep dive of AI at the edge, looking at the strategic value of different AI inference options.

In the final report of a four-part series, this edition of Telco AI: State of the Market covers one of the most important industry dynamics: AI for networks versus networks for AI.

AI is reshaping telecoms operations worldwide, offering a mix of opportunities and complex challenges. Understanding how to measure returns is paramount to ensuring sustainable value creation. This research therefore discusses methods to measure the impact of AI transformation.

The telecoms industry stands at a critical juncture, where the push for energy efficiency intersects with rapid technological advancements. This latest report in the AI series dives into the vital role of AI in enhancing energy efficiency in telecoms.

AI is a transformative technology, but it is important to look beyond the hype and identify the parts of the innovation cycle that matter most. How do they translate into commercial activity and possible changes in corporate strategy?