The telco reinvention: How AI can fuel value creation

McKinsey & Company

Research

79 Pages

McKinsey details how AI is reshaping connectivity, and how operators can successfully reinvent, compete, and share in the rewards of the AI economy.

Key Takeaways

Valuation: Regulatory constraints, a legacy business model, shifting customer expectations, and technological disruption have helped saddle telcos with both TSR and enterprise value multiples that have stayed flat at around 5 to 7 times for the past ten years, even as the tech sector’s have continued to grow to 15 or higher.
Total Shareholder Returns: While the industry experienced notably low TSR growth over the last two decades—at 29% versus 235% for all sectors globally—it has stabilized, growing 28% since the start of 2024, firmly on par with the overall global market.
Four Key Domains: The industry needs to embrace fundamental change and make strategic moves in four key domains: AI-native transformation, growth beyond the core, infrastructure innovation and market shaping.
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