As we move into 2025, market analysts are advising telcos to channel their investments in Gen AI more towards revenue-generating opportunities rather than back-office productivity, and to prioritise high-value enterprise customers even over consumers. However, the difficult economic climate means they will still struggle to deliver returns in the near term.
Cost reduction and greater efficiencies are expected to remain important business drivers, with commentators noting that the continuing decline in infrastructure investment is being accompanied by a shift from capital-intensive network rollouts towards a greater focus on operational efficiency and energy saving.
IoT, direct-to-cell satellite communications, enhanced Wi-Fi, and energy-efficient networking are among other technologies expected to remain prominent in 2025, while the potential resurgence of edge computing could be an enabling architecture for evolving RedCap and low-level IoT networks.
Also higher up the priority list than in previous network and connectivity forecasts are threats from cyber security and fraud, which continue to raise concerns. Countermeasures already being taken by telcos and their industry partners should deliver some rewards in the year ahead.
Focus will shift from network infrastructure to efficiency gains
Mobile network and service coverage continues to expand, with 5G global subscriptions estimated to account for around 25% of the total at year-end 2024 according to Ericsson’s Mobility Report. Internet penetration is also growing apace; the penetration rate in most emerging markets is expected to reach 90% in 2025 according to the Economist Intelligence Unit (EIU).
In contrast to previous years, in 2025 operators will shift their focus to increasing the efficiency of cellular networks as 5G networks mature, rather than on capital-intensive network rollouts. According to Juniper Research, growing pressure from regulatory bodies and mobile subscribers means that operators are prioritising network efficiency, energy savings and reducing OPEX.
Enterprise and industrial applications hold the greatest promise in 2025, according to Markus Persson, Global Industry Director, Telecoms at enterprise software company IFS. Telcos will turn to Industrial AI to help unlock 5G's potential in industrial environments, exploiting 5G’s low latency and high capacity to transform their operations and achieve tangible returns on investment.
5G-Standalone will drive RedCap adoption
As monetization of 5G continues to prove challenging for telcos, attention in the coming year will be focused on IoT, and specifically on RedCap technology, as holding the greatest promise in terms of revenue generation. Already extensively trialled in 2024, RedCap offers key benefits of 5G such as ultra-low latency and high reliability, but with somewhat reduced speeds and fewer of the more costly elements of full 5G.
According to Ericsson, the widening adoption of 5G standalone networks is bringing RedCap technology “into focus”. The tech is set to expand into both the consumer and enterprise segments via affordable voice-enabled wearables, industrial gateways and telematic devices. Analyst firm Omdia also expects global 5G IoT connections to grow rapidly throughout 2025 across a range of sectors including automotive, healthcare, transport and industrial IoT.
At the same time, limitations in network infrastructure that have long hindered IoT’s full realization will be addressed by a resurgence in edge computing, in which data can be processed closer to the source rather than relying on distant cloud servers. Having found a role in areas such as industrial processes and smart cities, edge computing is now able to help telcos ensure seamless connectivity between sensors, machinery, and analytics platforms, notes Persson.
By reducing latency, conserving bandwidth, and ensuring real-time decision-making, edge computing can help telecom operators to solve historical challenges like peak usage bottlenecks, allowing networks to dynamically allocate capacity for specific events or locations.
Juniper’s analysts also expect that Wi-Fi 7 (also known as IEEE 802.11be) will gain traction in 2025, particularly in the enterprise IoT market. The technology’s lower latency and higher speed connectivity compared to previously utilised Wi-Fi 6, 6E and 5G networks incorporates both 6GHz and 5GHz bands to establish a multi-link operation.
“A key feature of Wi-Fi 7 is its ability to maintain high speeds and low latency even when faced with high device and traffic volumes,” the company says.
Planning further into the future, work on the technical requirements for 6G, which began in 2024, will continue into 2025. “With operators slowing their annual investment in 5G infrastructure in 2025, they are expected to turn their attention to 6G,” says Juniper. “Whilst 5G was quick to focus on niche use cases such as autonomous vehicles, 6G must focus on highly monetizable enterprise use cases.”
Taking stock of Gen AI
If 2024 was the year for largely unconstrained investment in AI, then most analysts agree that 2025 will be the year to take stock. Predictions for Gen AI adoption continue to reflect the sense of an industry on the verge of seismic change, but also one that is struggling to manage the sheer magnitude of that change.
The coming year will see a real shift from the focus on using AI to improve back-office productivity towards the industry leveraging Gen AI for front-office and customer-facing innovations that ultimately generate revenue, says Matt Anderson, Head of Telecom Industry Solutions at Google Cloud.
Four key areas where Anderson expects Gen AI to impact the telco industry are customer service, revenue generation, cloud networks and application development. As well as powering virtual agents to handle a growing share of customer interactions, Gen AI can begin to create new revenue streams such as AI-assisted marketplaces, lower costs and enhance scalability in the cloud, and - coupled with telco APIs - help to build solutions that integrate seamlessly with network infrastructure.
On a cautionary note, analyst firm Deloitte lists a string of challenges or “critical gaps” around Gen AI that the TMT sector must address in order to progress. These include balancing Gen AI infrastructure investments with monetization, managing the energy consumption of Gen AI data centres, how best to use Gen AI in media and gaming, harnessing the power of Gen AI agents, and issues of trust and gender disparities.
“These are not just challenges for the industry but societal imperatives,” says Deloitte. “How we collectively address these gaps will define the legacy we create.”
Rather than the year of AI monetization, 2025 will be the year of realism as investments fail to start generating the hoped-for returns, says the EIU. Many companies will continue trialling the technology but further scaling up will be necessary before Gen AI becomes profitable for its users.
Along with other analysts, the EIU also cites the high energy costs associated with AI, along with sustainability, as causes for concern as clients and investors monitor the large carbon footprint of building AI models. While large-scale spending on AI infrastructure will continue in 2025, it will be the largest tech companies that are able to spend most heavily without affecting their bottom line too much. However, they will face challenges from tighter regulation as multiple countries pass AI laws.
“So far the only tech company to have made real money from the AI boom has been Nvidia, but the company will face steeper competition in 2025,” the EIU concludes.
Satellite disruptors yet to make their mark
Satellite providers - including Starlink, Globalstar, Telesat, Project Kuiper, and Eutelsat OneWeb - ramped up their activities during 2024 by building partnerships, extending coverage, providing services such as cellular backhaul, and acquiring new licences. They will likely continue to shake up the telecoms market in 2025.
However, the EIU argues that low-earth orbit (LEO) satellite services are yet to prove their commercial value, and the high cost of setting up satellite communications - coupled with strong competition from existing terrestrial telecoms infrastructure providers - mean that commercial satellite service penetration of the market is likely to remain low in 2025.
Therefore, the main users of satellite internet will continue to be enterprises as well as maritime, logistics, agriculture and military companies, all looking for reliable internet coverage in remote areas.
Meanwhile, Juniper Research expects that 2025 will see the first commercial direct-to-cell satellite connections for smartphones and IoT devices via a SIM card, as a result of the heavy investment by the likes of AST SpaceMobile, Lynk Global, Omnispace and Sateliot, and through operator partnerships.
In order to begin the monetisation of direct-to-cell services, operators must start to create the relevant sales channels to promote these services. They should look to promote their services to enterprises above all, as their clients have a higher average revenue per user than consumer subscribers.
Boosting cybersecurity and countering fraud
The growth of cloud-based network architectures and digital interconnected ecosystems is rendering networks more vulnerable to cyber threats, with critical implications for data privacy and national security, says Persson.
In 2025, he expects telecom operators to invest in AI-driven threat detection, encryption technologies, and comprehensive risk management frameworks to navigate regulatory requirements and protect sensitive data. “These tools will play a crucial role in identifying and mitigating cyber threats in real-time… before they cause significant damage”, he says.
In terms of fraud, operators and enterprises should begin to win back ground in the battle against the non-genuine A2P (Application-to-Person) SMS traffic that has plagued the industry for some years, according to Juniper Research.
Enhanced monitoring, identifying and blocking mechanisms to counter so-called Artificially Inflated Traffic (AIT), in the form of SMS traffic generated by fraudulent players for monetary gain, should result in a decline in AIT traffic in 2025, helping to protect SMS networks and discourage enterprises from putting operators’ SMS businesses under pressure by moving to alternative forms of authentication.
