Most of the world’s leading telcos are still locked in a seemingly endless stream of job losses that will culminate in halving their workforces in more extreme cases, such as AT&T and BT. While these might be bottoming out, they cheerfully attribute the losses to the automation dividend accentuated by machine learning, especially under the banner of Generative AI, they are also missing a trick.
They are failing to adequately harness new technologies for new business opportunities and revenues, which has been a bugbear for 5G from the outset. Meanwhile equipment makers, such as Ericsson, have been blaming their own recent lackluster results on the failure by telcos to roll out 5G as quickly as they had hoped or predicted.
By contrast, some of the tier 1 telcos have been posting decent results lately, aided perhaps by slowing down their rollouts but certainly through efficiencies through automation across their activities, from the networks themselves to call centers and marketing operations. There is a failure to make much progress in new revenue generating areas, such as network APIs, edge compute, and network slicing.
Some will argue that these revenues will come and that may be right, but there is a sense that so far AI’s role in the telco sector has been largely confined to cost cutting and efficiency rather than creativity. There are always exceptions, but often when asking telcos what AI has done for them, they will talk about improvements in call center agent productivity and increased conversion rates for marketing campaigns, which are valuable, but are certainly not going to create new jobs directly.
It is true rising profits provides a base for job creation, but only when the technology is aligned with a new business line. This point was made by PwC, the world’s second largest professional services firm, when discussing the results of its latest annual CEO survey in January 2025. The headline figure was that 70% of CEOs expect GenAI to transform how their company creates value, while 82% reported AI has either increased or at worst left unchanged headcount over the past year.
PwC argued that productivity savings should be invested in new business opportunities enabled by the ability to gain insights and make decisions more quickly on the back of GenAI, or else enterprises would fall behind.
The firm drew from its parallel 2024 Global Investors Survey, which found firstly that two thirds of respondents expected GenAI to deliver significant productivity gains within the next year for the companies they invest in – with a similar number expecting that to increase profitability. This group was divided over the impact on jobs, which at least meant as many expected headcounts to rise as to fall.
That will clearly not be the case in the telco sector, with the jobs confined to sectors likely to benefit more directly from AI, such as providers of healthcare diagnostics, or companies that specialize in the application of machine learning to problem solving. There are, however, a few telcos that are already harnessing GenAI in new areas, such as Deutsche Telekom (DT), which has been bullish about its potential to reinvigorate revenue growth after a relatively flat period in its case.
DT has been promoting an offering based on an LLM (Large Language Model) from OpenGPT-X as a ‘Made in Germany’ system that it hopes will be trusted by European customers for ensuring data sovereignty when using GenAI in personalization projects.
This model was backed by the German Federal Ministry for Economic Affairs and Climate Action (BMWK), featuring 7 billion parameters with the ability to converse in all 24 official European Union languages, available to use under the Apache 2.0 open-source license.
It may not be quite world beating, but has the advantage of being tuned to European requirements, and at least there is a telco at the helm aiming to extend its experience in harnessing big data in the cloud to GenAI and new use cases. It has not yet led to DT reversing job cuts, although they seem to have halted for now.
DT may be coming to the end of various job cutting programs that have been completed over the last few years, such as the loss of 1,300 positions out of 5,400 at its in-house IT service provider Telekom IT announced late in 2023, in addition to 350 taking early or partial retirement who will not be replaced.
Still, these are quite small numbers compared with losses at DT’s subsidiary T-Mobile US, which shed 5,000 jobs, or about 7% of its workforce, in a move announced in August 2023. The firm was apologetic then, as CEO Michael Sievert admitted this was unusual and against the grain of the company’s ethos – hopefully not to be repeated.
T-Mobile has been outperforming its competitors, and its job losses are modest compared with theirs, even though the others too have been profitable and enjoying growth recently. Certainly, it has been carnage at AT&T, where layoffs have been the main theme of CEO John Stankey’s tenure since July 2020. During that time, the headcount has been slashed from 230,000 to 141,000, after 9,500 more jobs were shed in 2024.
AT&T’s situation is admittedly unique, having been exposed by its disastrous acquisition of TV and media company Time Warner in 2018, which the company failed to assimilate and was summarily folded by Stankey into a joint venture with Discovery in 2022. That immediately erased 30,000 from AT&T’s bloated headcount.
Without an equivalent Time Warner factor, Verizon’s job cuts have not quite been at the same level but are still dramatic. The operator shed 32,600 jobs between 2020 and 2024, around 25% of the total, bringing the count down to just below 100,000 now.
There are at least signs of the headcount levelling out at Verizon, with under 6,000 jobs lost in 2024 compared with almost 12,000 in 2023. That may be a broad trend, but for the moment means that telcos will continue to employ far fewer people than they used to.
At least US telcos are boosting national productivity statistics, as average revenue per employee rises, by 6% at Verizon for example during 2024 to $1.35 million, and by 7% at AT&T to $868,000. A decade ago, the figures were respectively $717,000 and $544,000, although telecoms has been becoming an ever-less labor-intensive process, for far longer than that – dating back to the days of manual exchanges.
Over the pond at BT, 55,000 jobs are to be shed from the current workforce of 130,000 by the end of the decade, with a more specific breakdown between sectors than many telcos provide. About 15,000 losses are scheduled as the construction of national fiber networks comes to an end, 10,000 resulting from reduced maintenance because networks are more reliable and self-healing, 10,000 directly through replacement by AI, and 5,000 from restructuring.
This announcement came just before BT, in January 2025, reported a 3% revenue fall in revenues for Q3, to £5.2 billion ($6.46 billion), which prompted a further spike in job cuts. However, BT did indicate cost-cutting measures had already helped drive underlying pre-tax profits up 1% to £427 million ($103 million).
India’s Reliance Jio is a rather different case in a country where it has led rapid national 5G roll out, with hopes at last of raising historically rock bottom ARPUs, as well as productivity. Results have been good, with ARPU up about 10% and net profits 24.4% higher for the latest quarter reported in January 2025 at ₹6,477 crore ($743.6 million), while revenues rose 15.5% year-on-year to ₹29,307 crore ($3.36 billion).
Yet even Jio has been shedding jobs at a rate similar to some of its European and US counterparts recently, with its count down from 95,326 in 2023 to 90,067 by the end of 2024.
The dynamics are different at the equipment makers, which are governed more by individual competitive success and rates of roll out by their customers, over which they have limited influence. This explained Ericsson CEO Börje Ekholm’s very public howl of anguish during a quarterly analyst call in January 2025, when he decried that “5G has not been built out. If you take the North American market, 5G standalone is not rolled out. London in Europe has very limited buildout. Most of the time when you get the 5G icon on your phone, you are basically on dynamic spectrum sharing using 4G spectrum.”
That, he suggested, was why the last two years have been so bad, with a double-digit decline in sales over each one. Ericsson is now better placed, given its success in the US where it displaced Nokia by winning that infamous $14 billion five-year Open RAN contract at AT&T , announced in December 2023.
There are signs among both telcos and vendors that a bottom has been reached, with no further significant job cuts for many, apart from those at operators like BT that are shedding a lot now for (mostly) cyclical reasons.
The time has come for telcos to go on the offensive and capitalize on their status as lifelines for AI training, as providers of the data. As always, the challenge is to progress from being dumb pipes to suppliers of processed and sifted content ready for training, rather than just allowing third-parties to do that over their networks.
Yet with the prospect of further proliferation in telcos data generated by IoT devices and services, there is an opportunity to move up the AI value chain on the data supply side, as DT seems to be doing, as well as to develop new customer facing services. Both avenues would surely create some jobs.