New research reveals a critical two-year penalty window for operators that fail to scale AI-driven automation and edge AI fast enough to compete
HTEC, a global AI-first provider of software and hardware design and engineering services, has released The State of AI in Telecommunications 2025-2026, an industry-specific subset of its global AI research.
The report, which draws on insights from 255 C-suite telecoms leaders across the US, UK, Germany, Spain, Saudi Arabia and the UAE, finds only 24.8% of global telecoms executives believe their organisations can scale AI rapidly. This comes at a moment when operators are rolling out 5G standalone, pursuing edge AI deployment, and exploring 6G-era capabilities, making the gap between AI ambition and execution one of the sector’s most pressing competitive differentiators.
HTEC found that more than half of operators (53%) rely on isolated deployments, pilots, or limited use cases, with just 47% reporting AI is fully embedded across multiple functions.
Operators carry no margin for delay
The report surfaces a particularly acute finding on competitive timing. Leaders estimate it would take 1.95 years on average to rebuild competitiveness if they failed to act on AI opportunities. Their own execution timelines for critical initiatives, covering digital transformation, edge strategy, AI roadmap validation, workforce enablement, and new revenue streams, cluster between 1.6 and 1.8 years. The penalty window and the delivery window are effectively the same length. There is no buffer.
Skills shortages are near-total
Virtually every C-suite respondent (99%) reports technical skill shortages, with the sharpest deficits in cybersecurity and data privacy (48%), AI/ML expertise (40%) and data engineering (38%). The business impact is already measurable: 46% report higher costs, 42% face margin pressure and 41% point to reduced innovation as direct consequences.
Most don’t understand AI strategy well enough to execute
Despite broad strategic consensus on AI’s importance, 57.7% of telecom leaders fall into moderate, low, or very low AI literacy levels. The people responsible for scaling AI do not fully understand it. This compounds the primary operational barrier: 47.5% of leaders identify lack of executive alignment as the biggest obstacle to scaling, pointing to a coordination failure across network, IT, and commercial teams rather than a shortage of investment or intent. Strategic agreement at the top does not translate into execution alignment below it. Integration complexity deepens the problem, with 45.1% struggling to embed AI into legacy OSS/BSS environments and distributed infrastructure.
Edge AI offers a structural advantage, if operators can execute
One area of genuine confidence stands out. 93% of telecom leaders report familiarity with edge AI and 96% say they can deploy it, reflecting the sector’s inherent advantage in managing distributed infrastructure at scale. Leaders expect edge deployments to improve network reliability, strengthen data privacy, and deliver competitive advantage through latency and cost benefits. Most operators pursue hybrid build-and-partner models to accelerate rollout.
Where operators expect AI to generate measurable returns
- 5G/6G network optimisation and dynamic bandwidth allocation: 49.4%
- Connectivity and network performance at scale: 45.9%
- Operational cost reduction through automation: 42.4%
- New revenue models beyond core connectivity: 42%
- AI-powered customer experience personalisation: 38.4%
Philip Otley, Global Managing Partner, Telecommunications at HTEC, said: “Telcos are slow muscle that think in multi-year investment cycles. The GenAI ecosystem is fast muscle moving at an unprecedented pace. Right now, a race is underway between telcos reaching customers with AI services and companies like OpenAI and Anthropic capturing that same consumer attention. Telcos have the advantage of established customer relationships, trusted identity management, and the ability to deploy AI at the edge. But advantages only count if execution keeps pace. This will be the biggest change most people live through in their lives, with hundreds of trillions of dollars in value at stake. Telcos have a real chance to be part of that. The window to gain or lose plays out in the coming few years.”
Tim Sears, Chief AI Officer at HTEC, added: “The sector is strategically aligned but operationally fragmented. Leaders agree AI matters, but far fewer understand how to scale it. Our data shows the penalty for falling behind and the time needed to catch up are almost identical windows. That leaves operators with no margin for delay.”
The State of AI in Telecommunications 2025-2026 is now available for download here.