AI-as-a-service: Telcos are eyeing new revenue potential from generative AI

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The role of telecom operators in the generative AI space is evolving rapidly. Initially, many telcos focused on using AI for internal efficiencies and cost reduction. However, a growing number are now recognising the potential of generative AI-as-a-service offering for enterprises, particularly as part of wider solutions that combine AI with broader services.

Telcos seizing the generative AI opportunity

Telecom operators are increasingly moving beyond their traditional business models and investing in AI technologies that can help them tap into new revenue streams. STL Partners’ Telco generative AI adoption tracker, compiled in May 2024 and updated quarterly, offers a comprehensive overview of how telcos around the world are embracing generative AI (GenAI). A key finding from the tracker update in August 2024 is that 45% of GenAI implementations by telcos (up from 25% in May 2024) are designed to provide AI-related services to enterprises, beyond internal uses.

Implentations of AI-as-a-service (share of implementations)

Source: STL Partners

In some cases, telcos are launching proprietary large language models (LLMs) tailored to industry needs. In other instances, they are partnering with technology providers to deliver AI solutions and infrastructure as part of a broader portfolio. As the enterprise demand for AI grows, telcos are positioning themselves as key enablers in this space.

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Standalone generative AI offerings

For some operators, the first move into AI-as-a-service (AIaaS) is providing standalone GenAI solutions. This often involves offering platforms or tools that businesses can use to enhance their operations with AI. Additionally, beyond offering AI solutions, some telcos are taking a more infrastructure-focused approach. By building the necessary infrastructure to support AI workloads, telcos can offer AIaaS to enterprises, providing the computational power and resources required to deploy AI at scale, and allowing them to integrate GenAI into their operations without investing in expensive hardware.

For example:

  • Jio has developed the JioBrain AI platform, which offers businesses a range of AI tools, including GenAI capabilities.
  • T-Mobile has launched Ai Recaps, a note-taking tool powered by GenAI, which it sells to enterprises to enhance productivity.
  • KT provides a bespoke LLM specifically designed for corporate clients.
  • Telus offers a platform that enables companies to fine-tune large LLMs and create custom datasets for their own needs.
  • Swisscom has partnered with Nvidia to create GenAI ‘supercomputers’ that are not only used internally but also offered to enterprise clients.

These examples show how telcos are leveraging their internal AI expertise to create platforms that cater to the growing demand from businesses for AI solutions that can drive operational efficiencies and innovation.

Bundling generative AI with broader services

While standalone GenAI solutions have their place, some telcos are taking a more comprehensive approach by bundling GenAI with other key services such as cloud computing, connectivity, internet of things (IoT) automation and managed services. These bundled offerings often appeal to enterprises seeking end-to-end solutions, particularly small and medium-sized enterprises (SMEs) that may lack the resources or expertise to integrate AI and other services on their own.

Key examples include:

  • Maxis has partnered with Amazon Web Services (AWS) to provide GenAI and 5G solutions for industries such as retail and logistics, helping businesses accelerate digital transformation.
  • Vodafone Business, in collaboration with energy equipment and solutions specialist EcoMT, introduced TechYRoom, a cloud-based software that integrates voice control, GenAI and IoT automation. This combination of AI and IoT automation showcases how telcos can offer holistic solutions for smart environments.
  • Bharti Airtel is working with Google Cloud to provide cloud-managed services alongside AI/ML solutions, focusing on applications including geospatial analytics, voice analytics and marketing technologies.
  • Telstra integrates its network APIs with GenAI into the Vonage API Platform, targeting private networks and 5G solutions. This combination supports enterprises looking for both connectivity and AI-powered applications.

These examples illustrate how telcos are positioning themselves as more than just connectivity providers – they are hoping to become key players in the enterprise AI ecosystem, offering comprehensive AI-powered solutions that meet diverse business needs.

The growing role of telcos in the AI ecosystem

STL Partners’ Telco generative AI adoption tracker demonstrates that operators are positioning themselves as enablers of enterprise AI adoption. Telcos are learning from hyperscalers and stepping up their efforts to provide both tools and infrastructure that businesses need to harness the power of AI – and sometimes they do this in partnerships with those same hyperscalers. Whether offering standalone GenAI solutions or bundling them with other services, telcos have the potential to be key enablers of enterprise digital transformation.

Moving forward, the concept of AIaaS is likely to expand, with more operators building ecosystems that combine AI, connectivity, cloud services and more into a cohesive offering. The hyperscalers may currently dominate the AI landscape, but telcos – with their strong relationships with enterprises and established infrastructure – should not be underestimated as they have the potential to carve out an important role in this fast-growing market.

Kerina Naran

Kerina Naran

Kerina Naran

Research Analyst

Kerina is a research analyst at STL Partners and is now applying her advanced research and analytical skills from an extensive background in biomedical sciences to the dynamic telecoms and technology market. Kerina joined STL Partners after obtaining a PhD in Virology and Immunology from Imperial College London.

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