Research Note

February 2024 “Hey, hi!” A look at AI in a telecom disinvestment cycle marked with the emergence of augmented intelligence

February 2024


There is not a single day without an AI-related event these days! It’s clear that the introduction of generative AI in 4Q22 with ChatGPT gave a fresh boost to AI across the board as it touches everything we do. All this would have never happened without the gargantuan sums of money spent on AI over the past 10 years or so. Case in point: Figure 1 illustrates the annual global corporate investment in AI broken down by merger & acquisition (M&A), public offering, private investment, and minority stake. With more than $270B invested globally, 2021 was the biggest year ever fueled by a jump in private investment and M&A, respectively. The following 3 key observations about 2021 are worth noting:

  1. Our research suggests that the worldwide amount invested in AI was just $40B short of total telecom capex.
  2. None of the major notable AI M&A deals involved telecoms: Microsoft acquired RiskIQ and Refirm Labs, AWS acquired Wickr, IBM acquired Turbonomic, Accenture acquired Wabion and Umlaut, SentinelOne acquired Scalyr, Google’s WearOS merged with Samsung’s Tizen. However, in November 2021, Ericsson acquired Vonage, which can be considered as an AI company because they do conversational AI and have their own natural language model. In September 2022, Vonage launched AI Studio, a low code/no code tool to design, create and deploy customer engagement solutions that operate in natural language using AI.
  3. Our quarterly Wireless Infrastructure Research indicates that global 2G/3G/4G/5G equipment revenues for radio access network (RAN) and mobile packet core networks peaked in 2021 and started to decline in 2022. At the same time, capital intensities defined as the capex-to-revenue ratio peaked at 20% in 2022, fueled by 5G equipment spendings that also peaked globally that year. All this technically points to a disinvestment cycle that started in 2023 and is now entering its second year.

No worries, a new game is starting in the post-5G and AI investment peak era. It’s time to regroup and shift gears from saving money through AI-enabled network automation to making money by mastering the use of generative AI, which in turn creates the concept of augmented intelligence.

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