London – September 18, 2026 -- Ninety-seven percent of telecom executives expect AI to deliver major productivity and operational gains within five years, yet organizational readiness gaps threaten to blunt that upside, according to the EY-Parthenon Telco of Tomorrow study, based on interviews with nearly 100 telecom C-suite leaders globally.
Cédric Foray, EY Global Telecommunications Sector Leader, said telcos are not short of growth opportunities, but the greater challenge is whether they have the operating models, skills and strategic clarity needed to capture them.
AI adoption targets customer care and network optimization first
Telecom leaders are prioritizing AI in customer care and issue resolution (92%), network optimization (67%), and augmentation and service personalization (38% each). Despite this ambition, 54% cite budget constraints and 43% point to insufficient current skills as barriers to transformation. Thirty-four percent identify a lack of clarity around their strategic "North Star" as a key obstacle.
69% of executives expect three-quarters of the workforce to be upskilled or replaced
Workforce disruption is intensifying as AI-enabled operating models take hold. Only 31% of leaders believe the telecom sector will rank among the most attractive industries for employees in five years, raising concerns about talent supply even as demand for new skills grows. Foray said leaders who simply add AI to existing ways of working risk missing much of the value, and the real opportunity lies in reengineering how work gets done.
Non-core services growth catalyst rises to 50% from 34% in 2024
With traditional connectivity growth remaining modest, half of executives now identify non-core services as a leading growth catalyst, up from 34% in the prior 2024 study. Forty-seven percent rank overhauling business models to accelerate non-core growth among their top strategic priorities for the next five years, with cybersecurity, sovereign cloud, AI infrastructure and GPU-as-a-service cited as key focus areas. Eighty percent of leaders believe digital infrastructure remains a core asset telcos should own and manage, while 64% view superior customer understanding as a critical future competency, compared with 49% who cite network quality.
66% of executives see satellite operators as the top disruption threat
Two-thirds of executives view satellite operators as a leading source of disruption within five years, driven by advances in low-Earth orbit services that could undercut traditional connectivity, particularly in rural and underserved markets. Hyperscalers present a parallel challenge, increasingly competing in enterprise markets while also becoming critical ecosystem partners as AI infrastructure demand drives closer alignment between connectivity, cloud and computing services.
Adrian Baschnonga, EY Global Telecommunications Lead Analyst, said competition is increasingly coming from outside traditional telecom boundaries, with satellite providers expanding ambitions while hyperscalers become both competitors and essential partners.