Telcos to deliver over 3.5GW of AI factory and edge capacity by 2030
4 min read- Telco-operated AI factories will account for just under 3.5GW of capacity by 2030, growing at a CAGR of 70% from 2025 to 2030.
- To date, there have been 36 telco deployments of AI factories, primarily driven by demand for sovereign AI across the globe.
- Telcos will deploy 27x more capacity in AI factories than at the network edge by 2030.
LONDON – 24 February 2026 – Where will the compute live in the AI era? Telco-operated AI factories and network edge sites will account for over 3.5GW of IT load capacity globally by 2030, according to telecom advisory firm STL Partners.
In its latest market forecast, the analyst powerhouse forecasts global IT load capacity across two compute infrastructure opportunities for telcos. This includes network edge sites: sites deployed within telco networks providing low-latency compute services, and telco-operated AI factories: centralised data centres built strictly for hosting AI workloads.
These distinct compute hosting opportunities face materially different capacity growth dynamics over the next five years. By 2030, STL Partners projects telcos will deploy 27x more capacity in AI factories than at the network edge. While this in part reflects different minimum viable scale between the propositions, telcos have been quicker to capitalise on the AI factory opportunity. “Ultimately, telcos are investing in AI factories because they expect to see stronger returns on investment than from network edge data centres in the coming years. AI factories support model training, fine-tuning and large-scale inference, serving multiple layers of the AI ecosystem. By contrast, edge sites will still play a role, but mainly for targeted, wide-area, low-latency use cases such as transport and smart cities,” explains Krsna Singh, Research Analyst and co-author of the forecast.
Although telcos are investing more heavily in AI factories, STL Partners has observed renewed momentum in the network edge market after a period of stagnation.
Since 2025, several major telcos that were previously less active in this space have launched new propositions. However, significant challenges remain. In many markets, network edge services do not offer greater proximity than existing cloud infrastructure and provide only limited total IT load capacity. This raises questions about whether telcos can deliver a genuinely differentiated platform compared with traditional cloud providers. “Efforts to establish network edge federation in Europe may help, but federation can only succeed where there is sufficient edge infrastructure to federate in the first place,” adds Singh.
Momentum in AI factories is building fastest in East Asia, with operators in China, Japan and South Korea emerging as early movers with some of the most ambitious plans.
Three distinct AI factory models are emerging. Some operators, such as Iliad, are building smaller facilities focused on local inference and model fine-tuning. Others, including SK Telecom, are targeting the full AI lifecycle, from training to deployment, backed by much larger compute investments. A third group, led by players such as China Telecom, is combining AI factories with network edge sites to create a broader service portfolio for hosting enterprise AI workloads.
“With sovereignty concerns driving a significant share of AI factory deployments, telcos are well placed as domestic champions to capitalise on this opportunity. However, they must take an incremental approach to capacity build-out. Phasing investment helps manage capital risk and avoids the overbuild challenges seen in early network edge rollouts, where demand had yet to mature. As AI factories are both capital-intensive and operationally complex, telcos also need clear partnership strategies with technology vendors and data centre specialists, such as NVIDIA Cloud Partners,” says Singh.
Find out more insights from STL Partners’ forecast by downloading an extract here
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STL Partners is a leading research and consulting company that focuses on the telecom industry and adjacent markets by helping telcos and their partners innovate, grow and stay ahead of the competition.
