5 Strategies to Unlock Profitable CSP Growth in the AI Era
This article was first published in Telecoms.com.
At the recent Qvantel Digital Leaders Summit in Dubai, the CEO of VEON Group delivered a powerful keynote speech stating that VEON is a digital services company that just happens to have telecoms licences. This was arguably the clearest statement yet, highlighting the fundamental transformation the telecoms industry is undergoing.
This transformation is fundamental to the industry’s growth. Connectivity revenue is flat, and the GSMA has forecast that mobile data volumes will quadruple by 2030. In an age where almost all data plans are ‘all you can eat,’ the additional costs of delivering all this extra data could be a hammer blow to the profitability of many communication service providers (CSPs).
CSPs must move forward to grow. The move to sell ‘beyond connectivity,’ alongside the roll-out and adoption of AI into almost every part of a CSP’s operations, is changing telecoms. We are now moving into the AI era where there is an increased focus on speed and agility to drive efficiency, increase revenues and improve profitability, and how CSPs run their businesses is shifting significantly.
As the newly combined leadership of two companies focused on powering this transformation, we see five key strategies central to CSPs unlocking profitable growth as we move beyond the confines of traditional telecoms.
1 – From Monetizing Connectivity to Monetizing Anything
The commoditisation of connectivity, coupled with huge growth opportunities in digital services for B2C customers and tech solutions for B2B, means that CSPs must be able to sell and monetize anything. This ranges from digital services like fintech, entertainment and utilities, to advanced solutions like edge and cloud computing and AI services. Critically, they also need to be able to sell services to partners (B2B2X models) who can include them in their own offers.
We’ve seen Tier 1 CSPs increase revenue from digital services to nearly 30% of total B2C revenue. Meanwhile, the B2B space is even more critical for long-term growth. CSPs are developing ICT solutions and selling connectivity plus cloud, IoT, enterprise SaaS, AI and many more tech solutions to get their share of this fast-growing market. Analyst firm Omdia reports that while B2B currently accounts for 40% of CSP revenue, it can deliver 80% of their growth potential, while the GSMA calls it a $400 billion opportunity for CSPs.
2 – Enable a Culture of Innovation and Continuous Experimentation
To capture these new growth areas, CSPs must become much more agile. They need to cost-effectively experiment with a much wider range of offers, from dynamic pricing and long-term subscriptions to limited-time partnerships and short-term event-based offers. A culture that encourages innovation means removing the fear of failure.
A highly effective way to significantly reduce the cost and risk of developing new offers and provide a culture where innovation is encouraged is to enable business users (marketing, product) to configure and deploy offers directly within the business support system (BSS) using no-code/low-code tools. Integrating AI into this process can also deliver increased cost-efficiency, further accelerate creativity and help remove the fear of failure. This provides the foundation for CSPs to experiment with new ideas, new processes and new offers.
3 – Move to Experience-Centricity
Digital-native giants like Spotify and Netflix have set a high bar for personalised digital experience, and this is the level CSPs need to compete with.
An experience-centric approach shifts the focus to what the customer feels and experiences in every moment of their journey. This requires real-time data, contextual awareness and AI-driven decisioning that adapts dynamically to user behaviour. Instead of static offers, CSPs can deliver proactive support, instant onboarding, transparent billing, and highly personalised engagement, orchestrated seamlessly across all channels.
This shift is already impacting monetization with the rollout of experience-based charging (EBC), such as QoS speed tiers, gaming passes, or personalised speed boosts. These charges can be personalised and linked to perceived value, not just volume, helping CSPs move from providing volume-based commoditised connectivity to delivering premium, value-based services for B2C and B2B customers.
4 – Use AI to Generate Revenues (Beyond Efficiency)
Many initial AI use cases deployed by CSPs have rightly focused on increasing operational efficiency. The next phase is to build on that foundation and strategically use AI to directly drive revenue growth.
CSPs possess an unprecedented amount of real-time and historical data about customers, their behaviour, location and preferences. This unique asset can be leveraged to create AI-driven personalised offers, contextual bundles and highly targeted messages. AI can deliver offers precisely when and where they are most relevant, whether it's a personalised trial for a new digital service or a location-based offer. Furthermore, AI can accelerate complex B2B sales cycles and could soon enable dynamic pricing for services and automatic adjustment of network resources to meet strict B2B SLAs.
5 – Organisational Delayering and Focus on ROI
Many CSPs are undergoing delayering, splitting their operations into infrastructure companies (infracos), network companies (netcos) and service companies (servicecos). This separation provides a crucial focus on increasing return on investment (ROI) and prevents the new entities from being restricted by traditional telco mindsets.
The creation of the digital servicecos has allowed CSPs to successfully enter new markets such as fintech, ridesharing, healthcare and education without the old, limiting mindset of ‘network and connectivity first.’ Likewise, the rise of netcos has moved the focus from simply supporting internal connectivity needs to actively generating revenue. We see this in the increased focus on developing MVNE capabilities and attracting a growing number of MVNOs, thereby maximizing ROI on their network investments.
The five strategies above show how CSPs are actively moving beyond traditional telecoms operations and business models. These transformations are kick-starting growth and fundamentally changing what CSPs require from their technology partners.
The traditional customer-vendor model is obsolete. Vendors must now be true partners to CSPs. They need to enable this success by delivering an AI-driven BSS and monetization platform, a foundation for speed and agility, while adopting a collaborative, customer-centric approach that directly supports CSPs’ profitable growth in today’s rapidly evolving markets.
Tero Kivisaari
President, Qvantel
Robert Stabile
CEO, Optiva