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The industry that sustains modern digital life generates more than a trillion dollars annually, but it faces an existential paradox: while data traffic multiplies unabated, its margins plummet, and 2.6 billion people remain disconnected.
The paradox of a prosperous sector in permanent crisis
By: Gabriel E. Levy B.
The telecommunications sector is going through a historical crossroads. It produces revenues characteristic of a mature industry, but at the same time it is forced to execute investments typical of an environment in profound transformation.
Artificial intelligence opens up the possibility of opportunities valued at tens of billions of dollars, although it also poses the risk of concentrating even more power in large technology platforms.
The wave of corporate mergers brings the scale needed to compete, but it can reduce competition and raise costs for end users.
Meanwhile, one in three people on the planet has not yet had their first internet connection.
The central question is no longer whether the industry will transform, but who will capture most of the value generated by that transformation.
The next few years will be decisive in whether traditional operators manage to reconvert themselves into essential players in the digital economy or if they end up relegated to the role of mere data highways within an ecosystem that they helped to build, but over which they have lost control.
For the 2.6 billion people who still remain disconnected, the result is not an abstract discussion, but what will define the difference between integrating into the 21st century or being permanently marginalized.
Between the financial pressure of large technology platforms, an unprecedented wave of mergers, the artificial intelligence revolution and a digital divide that refuses to close, telecommunications operators and ISPs, i.e. internet service providers, are going through the most profound transformation in their history.
What happens in the next five years will define who controls the infrastructure on which the 21st century rests.
Global Outlook: A trillion dollars and evaporating margins
The global telecommunications services market reached $1.1 trillion in 2023, according to PwC, with growth of 4.3% year-on-year.
The figure is impressive until you look at the small print: the projection for 2028 barely exceeds 2.9% annual growth, below inflation in most markets.
In other words, the sector is growing in nominal terms, but shrinking in real terms.
The average revenue per user, known as ARPU and which is the most closely watched metric in the industry, is down 2% annually and PwC’s projections do not anticipate a reversal before 2029.
The explanation for this erosion has its own name: OTT platforms.
Netflix, YouTube, WhatsApp, Zoom and Meta carry their services on networks that operators built with multibillion-dollar investments, but capture most of the economic value.
The OTT market exceeded 575,000 million dollars in 2024 IMARC and is growing at rates of 20% per year, while operators’ revenues are barely moving.
Between 2012 and 2025, mobile data traffic grew by more than 50% annually; Telecommunications services revenues grew by just 1% a year.
The asymmetry is brutal.
The financial result is reflected in painful cuts.
The sector’s capital investment fell by 7.7% year-on-year to $294.6 billion in the annualized period to the third quarter of 2024.
Global employment in telecommunications fell by 1.5% to 4.45 million workers.
Business Wire PwC sums up the situation with a devastating sentence:
“Virtually all of the cash the industry generates is absorbed by equity investments, dividends and debt service.”
The biggest merger wave in a decade
Faced with shrinking margins, operators have found an answer: merge.
The value of mergers and acquisitions in telecommunications soared to $126 billion in 2024, more than five times the level recorded in the first three quarters of 2023.
Deloitte projects about 400 deals by 2025 and estimates that two-thirds of the value will be concentrated in mega-mergers of scale.
Recent moves reshape entire markets.
Verizon has agreed to buy Frontier Communications for $20 billion, adding up to 7.6 million homes with fiber optics.
In the UK, Vodafone and Three have completed their merger to create VodafoneThree, Britain’s largest mobile operator with 28.8 million customers and an £11 billion investment commitment to 5G networks over the next decade.
Charter Communications acquired Cox for about $34.5 billion in one of the largest broadband operations in history.
In Europe, Telecom Italia sold its fixed network to the KKR fund and thus set a precedent for the separation between infrastructure and services.
The logic is clear: an average European operator serves 4.5 million subscribers, while an American operator serves 95 million and a Chinese one reaches 400 million.
Without scale, competing becomes increasingly difficult.
Artificial intelligence transforms and pressures networks
If there is one element that is reconfiguring the opportunities and risks of the sector at the same time, it is artificial intelligence.
On the one hand, AI allows operators to manage networks up to four times longer with the same human staff, anticipate failures with levels of accuracy greater than 94% and reduce operating costs by 20% to 40%.
Deutsche Telekom developed “RAN Guardian”, an AI-based agent that autonomously identifies and corrects network incidents.
Vodafone, together with Google Cloud, manages more than 45 million monthly interactions through its TOBi chatbot.
Bharti Airtel processes 2,500 million calls a day with its anti-fraud system based on artificial intelligence.
At the same time, the rise of generative AI, ranging from tools like ChatGPT to the gigantic data centers used to train these models, is driving exponentially growing demand for bandwidth.
Data center capacity acquisitions increased by 330% between 2020 and 2024, according to Zayo.
CoreSite notes that just ten buyers, mainly tech giants such as Microsoft, Google, Amazon, and Meta, account for 62% of all capacity purchases.
McKinsey estimates that global demand for data centers could triple by 2030, reaching at least 170 gigawatts.
For its part, the International Energy Agency estimates that the electricity consumption of these infrastructures will increase from 415 terawatt-hours in 2024 to 945 in 2030.
The case of Lumen Technologies shows what can happen when an operator manages to position itself strategically: the company secured more than $8 billion in fiber optic contracts with Microsoft, Amazon, Google, and Meta, and its stock price increased by more than 300%.
McKinsey estimates that fiber connectivity destined for new data centers represents an opportunity of between 30,000 and 50,000 million dollars by 2030.
However, the risk is that tech giants end up developing their own infrastructure, leaving incumbents relegated to the role of simple providers of basic connectivity.
2.6 billion people still without access to the internet
While the industry discusses profitability and artificial intelligence, 2,600 million people, equivalent to 32% of the world’s population, still do not have access to the internet (ITU), according to figures from the International Telecommunication Union published in November 2024.
The gap is huge: penetration reaches 93% in high-income countries (Statista) and just 27% in low-income economies (ITU).
In Africa, only 38% of the population is connected (UTI).
Of the 2.6 billion people who are disconnected, 1.8 billion live in rural areas.Top of the form
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The gap is not only in access, but also in quality and price. The average download speed in less developed countries is around 30 Mbps, Fair Internet Report versus 205 Mbps in G7 nations.
The cost of fixed broadband consumes 30% of monthly income in low-income countries, while in advanced economies it represents only 1-2%.
In Africa, mobile connection costs 14 times more than in Europe, a gap that, far from narrowing, has widened compared to the previous year.
Starlink, SpaceX’s constellation of satellites, has emerged as a disruptive player: it already operates in more than 100 countries, has more than 8,600 satellites in orbit and offers average speeds of 45 to 106 Mbps in African markets.
However, its rates are still prohibitive for the most vulnerable populations.
The promise of universal connectivity by 2030, which is a formal goal of the United Nations, looks increasingly distant: the ITU recognizes that the world is moving “at a slow pace when it should be running”.
The regulatory battlefield is reconfigured
The regulation of the sector is experiencing its own earthquake.
In the United States, net neutrality was restored by the FCC in April 2024, but a federal court struck it down in January 2025.
With the appointment of Brendan Carr as FCC chairman under the Trump administration, the regulator has waged a massive deregulation campaign and eliminated more than 1,100 rules in its “Delete, Delete, Delete” initiative.
In practice, federal net neutrality is dead.
In Europe, the debate over whether big tech platforms should pay to use operators’ networks, so-called “fair share”, dominated the agenda for years, but the European Commission eventually ruled out imposing mandatory payments.
Latin America: The Unequal Giant with Unexpected Heroes
The telecommunications sector in Latin America generated 550,000 million dollars in economic value in 2024, equivalent to 8.2% of the regional GDP, according to the GSMA.
With some 485 million unique mobile subscribers and an internet penetration of 74.6%, the region shows significant, but deeply uneven, progress.
Chile leads connectivity with 94.5% penetration and download speeds close to 280 Mbps, even higher than those of the United States.
Uruguay stands out for its almost universal deployment of fiber optics through Antel, the state-owned operator.
At the opposite extreme, Haiti does not reach 50% penetration, Guatemala barely exceeds 56% and Honduras is around 65%.
The urban-rural divide is dramatic: 77% of urban households have internet, compared to only 38% of rural households, according to ECLAC.
The region’s corporate map is in the midst of a revolution
Telefónica has announced its withdrawal from practically all of Latin America and is selling its operations in Argentina, Colombia, Peru, Uruguay, Ecuador, Chile and Venezuela to concentrate on Spain, Germany, the United Kingdom and Brazil.
Millicom, known as Tigo, has been the main buyer and acquired the Colombian and Uruguayan operations.
América Móvil, Carlos Slim’s conglomerate, maintains its dominant position with 323 million wireless subscribers and is growing at a steady rate of 6.6% in service revenues.
The problem of 5G
The development of 5G networks is progressing at uneven rates between different countries: by the end of 2024, 76 million 5G accesses were counted, almost double compared to the previous year.
Brazil leads the adoption, with more than seven commercial infrastructures in operation and with the highest volume of radio spectrum allocated for this technology in the region.
In Colombia, many of the winners of spectrum segments have not yet started operations, leaving Claro of the Slim group as the large and almost only national provider of 5G connectivity services.
Mexico, on the other hand, faces a context of uncertainty after the elimination of the Federal Telecommunications Institute and the subsequent cancellation of its main 5G spectrum tender in January 2025.
One of the most relevant phenomena in the region is the accelerated expansion of small internet providers, in countries such as Colombia they are the largest actors in reducing the digital divide in remote regions.
In Brazil, more than 9,500 smaller-scale ISPs account for more than 60% of the country’s fiber optic links and lead the service in 3,500 of Brazil’s 5,570 municipalities, where they often provide performance levels higher than those of large companies.
In Argentina, more than 1,500 SMEs and cooperatives bring connectivity to populations that larger operators exclude from their investment plans.
These players were recently grouped together in the ALT+ regional alliance and have become one of the most underrated success stories in the global telecommunications ecosystem.
A future that demands urgent decisions
The telecommunications sector is going through a historical crossroads. It produces revenues characteristic of a mature industry, but at the same time it is forced to execute investments typical of an environment in profound transformation.
Artificial intelligence opens up the possibility of opportunities valued at tens of billions of dollars, although it also poses the risk of concentrating even more power in large technology platforms.
The wave of corporate mergers brings the scale needed to compete, but it can reduce competition and raise costs for end users. Meanwhile, one in three people on the planet has not yet had their first internet connection.
In conclusion, the central question is no longer whether the industry will transform, but who will capture most of the value generated by that transformation.
The next few years will be decisive in whether traditional operators manage to reconvert themselves into essential players in the digital economy or if they end up relegated to the role of mere data highways within an ecosystem that they helped to build, but over which they have lost control.
For the 2.6 billion people who still remain disconnected, the result is not an abstract discussion, but what will define the difference between integrating into the 21st century or being permanently marginalized.
Telecom operators and ISPs are going through the biggest transformation in their history, driven by pressure from big tech platforms, an unprecedented wave of mergers, the expansion of artificial intelligence, and a digital divide that still persists.
Artificial intelligence opens up opportunities worth tens of billions of dollars, but it can also concentrate more power in Big Tech.
The sector is thus at a crossroads: it generates income from a mature industry, but it needs to make investments typical of a profound transformation.
The result will define whether operators manage to become central actors in the digital economy or if they are relegated to the role of simple data highways.
