Since 2024, telcos have faced challenges when it came to their telecom supply chain risk, affecting everything from 5G networks’ rollout to critical semiconductors productions. While the industry seeks growth endorsed by innovation, vulnerability management has become a priority for leaders at major events like Barcelona’s Mobile World Congress (MWC).
With the network infrastructure development and 5G technology disruption threats, telecom leaders’ attention is fixed on innovations like generative-AI (Gen-AI) and next-generation networks.
Supply Chain Resilience in the Telecom Industry
GenAI represents a big opportunity for telcos as industries wonder how to secure their part of the colossal investments that will be placed in AI chips, data centers, and software services. Here, connectivity is key as companies connect billions of devices and users across the globe, but managing telecom supply chain risk remains crucial to capitalize on these opportunities.
While most current AI applications do not demand high bandwidth, new ideas like the AI Radio Access Network (RAN) can flip that on its head. It brings AI-powered processors to cell towers, making networks smart and responsive. Others see AI RAN as the logical next step after Open RAN and perhaps even what 6G will end up being.
Fixed wireless access (FWA) is also an economical way of delivering internet access, especially to rural areas, where telcos are re-architecting their telecom network infrastructure to achieve maximum efficiency and user experience.
But multi-vendor Open RAN and end-to-end 5G standalone network development is slow due to cost, complexity, and telecom semiconductor supply chain.
M&A and Private Equity Amid Supply Risks
Mergers and acquisitions (M&A) have been at the forefront of the telecom sector, with operators selling noncore assets like cell towers to private equity (PE) and infrastructure funds. PE activity is on the rise, with financial buyers representing over 80% of telecom deals in early 2024, compared with about 60% in 2021.
PE firms bring in new capital and creative deal structures. Rogers Communications, for example, sold a minority stake in its wireless backhaul network for $5 billion, portraying efforts from multiple PE investors. These connections allow telecoms to unlock value and focus more on growth while managing supply chain management in the telecom industry.
PE is also backing telecom incursions into GenAI data centers. More than 15 telecom operators will set up AI centers to offer new services, driven by data sovereignty concerns. Fiber optic networks connecting these data centers are another focus of M&A activity, especially in Europe and North America.
Telecommunications supply chain and its management remain at the core of the telecom industry outlook for a prosperous future.
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