AI technology presents a $500 billion opportunity in the global telecom sector, driving growth and efficiencies.

From Investing.com: 2024-12-07 03:30:00

The global telecom sector is set to harness the power of AI, with Morgan Stanley predicting potential gains of $500 billion in market capitalization and 400 basis points increase in free cash flow margins. AI can drive cost savings, revenue growth, CAPEX efficiency, and working capital optimization, but challenges like data silos must be overcome.

Cost savings in telecom operations could see a 15% reduction in COGS and OPEX over five years, thanks to AI-powered energy-saving systems. Revenue enhancement is possible through better customer segmentation and personalized offerings, boosting average revenue per user. Telcos like Verizon are already benefiting from AI-driven customer retention strategies.

AI can optimize CAPEX by up to 20% through network planning and maintenance improvements. Predictive maintenance and digital twin technology help prevent system failures and streamline infrastructure deployment. Working capital optimization through AI applications such as demand forecasting and fraud detection can enhance inventory management and financial stability for telcos.

Despite the potential benefits, widespread AI adoption in telecom faces challenges like fragmented data infrastructure and integration costs. Roughly 60% of global carriers are still in the pilot or assessment phase for AI technologies. Overcoming these obstacles is crucial for achieving the full potential of AI in the sector and attracting investor interest.

Investment recommendations from Morgan Stanley include preferred stocks like Deutsche Telekom AG Na, America Movil, Telefonica Brasil, Singapore Telecommunications Ltd, Telstra Group Ltd, Rakuten Inc, SK Telecom, and KT Corp. AI is expected to extend positive free cash flow trends and drive growth in the telecom industry, making these stocks attractive options for investors.



Read more at Investing.com: What is the AI opportunity for global telecom sector? By Investing.com