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      At first, AI was very much a cloud story. Everyone wanted to train new LLMs and models. And that was best done in centralised hubs due to cost and infrastructure needs.

      Now, however, we have evolved into an Age of Inference which is rapidly moving AI to the edge as customers seek reduced latency and lower cloud egress costs.

      The opportunity for telcos is rapidly shifting.

      Customer adoption has also changed the shape of capacity demand for telcos. The leaders are finding that AI introduces unpredictable traffic patterns and massive scalability requirements into the network. That is putting pressure on telco leaders to ramp up their network investments to ensure they are offering high-capacity and highly meshed networks that can adapt to changing demand curves while supporting AI-driven orchestration.

      Lars Meyer
      Lars Meyer

      Partner, Deal Advisory Infrastructure

      KPMG in the UK

      Assad Noori
      Assad Noori

      Head of Digital Infrastructure Advisory

      KPMG in the UK

      A rapidly evolving environment

      All of this is coming at a challenging time for UK’s telcos. After years of frenzied fibre build-outs, investor exuberance and overlapping trenches, the focus has shifted to consolidating and capturing value (read more about this challenge and how it is being overcome in this recent report). At the same time, they are considering how best to approach the inevitable rollout of 6G networks (here’s a good article on that challenge).

      Indeed, the impact of AI is being felt up and down the telco organisation. In a recent CFO Forum hosted by KPMG, telco finance leaders talked about the impact of AI on fundraising and investment, on business models and partnerships and on construction lifecycles and programme governance. The conversations made it clear that AI is more than just a capacity and network play – it is a clarion call for enterprise transformation.

      Get ready for an AI world

      While there are certainly many questions about the overall value and long-term impact of the AI revolution, the rapid and wide-scale adoption of AI (in all its forms) suggests that AI will be ubiquitous and embedded in every layer of compute within the next five years. It will drive the vast majority of capacity demand – yet that demand will likely be more distributed as AI workloads dynamically move based on energy availability and latency needs.

      Open, federated ecosystems will enable global collaboration as telcos, cloud providers, AI vendors, data centres, GPU providers and AI model trainers develop partnerships and ecosystems that drive innovation, distribute workloads and flex to customer demand shifts. Open ecosystems and automation-first environments will be key to encouraging the type of AI integration that will be unleashed.

      5 ways to thrive

      What are the leading telcos in Europe and the UK doing to thrive in this rapidly evolving and disrupted environment? Based on our work and experience, here are five actions telco leaders could be considering:

      • Building partnerships

        In the AI world, collaboration is critical. The leading telcos are partnering with satellite providers, cloud companies, AI vendors and data centres, supported by open, federated ecosystems and automation-first environments.

      • Enhancing resilience

        The leaders are working to restore trust and position themselves as secure intermediaries in the AI ecosystem by providing hybrid and multi-cloud strategies plus hyper-converged infrastructure to improve resilience.

      • Exploring AI as an enabler

        They are looking at AI-driven network automation (AI Ops) to achieve scalability and adaptability, and they are using AI to facilitate protocol evolutions, certifications and the integration of new standards.

      • Moving up the value chain

        We are seeing the leading telcos start to refocus their value proposition to position themselves as the ‘intelligent fabric’ that underpins reliable, high-capacity and latency-aware networks.

      • Staying pragmatic yet future focused

        The leading telcos are constantly evaluating how new technologies might influence demand, customer expectations and business models and are making smart and pragmatic investments into new innovations.

      From survive to thrive

      At KPMG, we recognise that telco organisations face significant and challenging digital infrastructure decisions that must be made in an ever-evolving landscape. With deep practical digital infrastructure experience and extensive market knowledge, our professionals work across the digital ecosystem to help clients create value and drive long-term success. To learn more about the trends we see in the market – or how the leading organisations are responding – we encourage you to contact us.

      Our technology insights

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      Lars Meyer
      Lars Meyer

      Partner, Deal Advisory Infrastructure

      KPMG in the UK

      Assad Noori
      Assad Noori

      Head of Digital Infrastructure Advisory

      KPMG in the UK

      MTD TEST

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