Global telecommunications carriers are experiencing an extraordinary surge, writes Anna Ribeiro. The buildouts of 5G and fibre networks require large capital infusions even as revenue growth is slow. According to McKinsey, global telcos have invested about US$300 billion more in networks since 2018, and returns on invested capital have been eroded. As operator new builds were scaled back ‘in the face of challenging 5G comparisons and uncertain demand,’ telco capex fell 10% year-over-year in the first half of 2024, with industry statistics indicating total mobile funding is moving to the ‘soft side’ in China.
With profits under pressure, maintenance and upgrade costs continue to rise from aging cell sites to the shift to cloud, telcos cannot afford to move slowly. Telcos, analysts say, will need to change the shape and operation of their IT for agility and efficiency to survive.
Legacy IT and systemic drag
One major roadblock is legacy technology. Decades of siloed systems and proprietary platforms are now a millstone, limiting innovation and automation. In a recent EY survey, 75% of telecom CEOs said the ‘burden of legacy IT’ prevents their organisations from innovating at the pace.
A Nokia-backed industry report, meanwhile, warns that many operators are ‘unable to effectively deploy AI’ because they are using old systems with locked-in interfaces. Patchwork systems mean data access and integration are poor across these systems, making even simple upgrades slow and expensive. For instance, telco data is frequently locked away in outdated billing, provisioning or network tools, spurring never-ending reconciliation nightmares and hampering analytics.
The result is dual pressure: enormous spending to keep legacy networks running and missed opportunities for new revenue. Each network upgrade (say, adding fibre capacity or securing against cyberthreats) becomes a massive project involving dozens of vendor platforms.
McKinsey notes that most telcos still run three to four different IT stacks in parallel, slowing customer service changes and driving up costs. In this environment, analysts emphasise that telcos must simplify IT if they are to innovate. “Telcos should carefully consider how best to phase emerging technology deployments … given the complex mix of software and hardware in scope, and the need to simplify legacy IT and networks,” advises EY’s Adrian Baschnonga.
Clearly, in short, legacy systems are directly opposing agility.
Why agility is now critical
With such costs and competitive pressures, agility has shifted from the ‘nice-to-have’ basket to the ‘urgent-must-have’ basket. Industry experts stress that telcos’ internal IT capabilities have ‘never been more critical.’
McKinsey points to the need for faster tech adoption. As telcos contend with significant expenses of 5G and fibre, the capability for quick creation and integration of new technologies into operations is ‘no longer a luxury but a necessity.’ Practically, this will require reorganising telecoms IT around more agile, DevOps-style processes rather than slow waterfall projects.
There are a number of benefits that can be realised from agile ways of working, with cross-functional, iterative and continuous delivery.
Agile working using cross-functional teams, iterative planning and continuous delivery can unlock several benefits. For example, Ericsson argues that 5G’s evolution demands ‘iterative and incremental network evolution,’ so operators can adapt quickly to new use cases. By breaking large projects into small, testable pieces, carriers can shorten cycle times and get faster feedback. Ericsson’s own specialists note that agile methods let operators develop just what’s needed for an initial launch, then refine remaining features later. Such an approach ‘not only improves time-to-market but also speeds up the feedback loops’ for new services.
In other words, when every quarter requires fresh ROI, being able to roll out improvements in weeks rather than years is a game-changer.
In practice, agile transformations at telcos typically involve adopting DevOps/CI-CD pipelines, automated testing and flexible commercial models. Vendors report telcos experimenting with everything from daily stand-ups and sprint backlogs between carriers and suppliers, to new zero-touch network operations powered by AI. The end goal is a continuous improvement culture, not one-off projects.
As Ericsson puts it, ‘continuous improvement… is not only about doing transformation once but instead being curious on a daily basis how we all can work smarter and create more value while having a mindset of continuous learning.’ In short, agility becomes the operating system for building 5G and fibre networks as living platforms, not static assets.
Agile in action with real industry examples
- Cloud-native agility: A high-profile case is Rakuten’s cloud-native network. Launched in 2020 as a new entrant, Rakuten built the world’s first fully virtualised 4G/5G system from scratch. It uses open software and automation so effectively that 15 engineers could manage the company’s network fabrics, leading to a ‘huge time and cost advantage’ over traditional operations. The lean, software-driven approach lets Rakuten deploy new services quickly, growing subscribers by about 38% in one year, and cut hardware capital expenditure by disaggregating vendor equipment.
- Agile network practices: Germany’s biggest network operator, Deutsche Telekom, has adopted agile practices in its network rollout. With Capgemini, DT utilised distributed agile teams to create a new OSS/BSS platform for fibre broadband roll-out. Agile teams used a Scaled Agile Framework (SAFe) with domain-driven design and DevOps, where cross-functional squads could dynamically prioritise and roll-out infrastructure upgrades. These agile methods allegedly allowed DT to speed up its fibre network build-out and customer service introductions against the standard waterfall models.
- Cloud-native cores and OSS/BSS: Many telcos are refactoring core networks and support systems for speed. Cloud-based, containerised network cores and modern digital OSS/BSS stacks allow software updates to be pushed frequently. By transitioning from old-breed billing platforms to dynamic SaaS offerings, operators can bring new pricing plans or IoT packages to the market in weeks, instead of months. More than 60% of CSPs now engage in some form of agile development, according to various vendors and consultancies; the level of success with it varies, though.
These examples underline a common theme. Telcos that embrace agile methods begin to blur the line between IT and network operations. Projects become continuous pipelines and teams iterate relentlessly, in stark contrast to the old model of periodic, heavy lift upgrades.
Measurable pay-offs of agile principles
The shift to agility is paying off in measurable ways. Leading telcos report significantly better performance once agile principles take hold. McKinsey’s benchmarking study found that top-performing operators spend far less on IT relative to revenue (around 3.7% of sales versus about 5.2% for peers). In practice, this meant one operator slashed its IT budget by as much as 40% during a holistic transformation. Moreover, carriers with high IT maturity saw revenue growth about three percentage points faster and higher profit margins than average operators.
Agile methods also accelerate innovation. Boston Consulting Group (BCG) reinforces this. According to BCG, telcos that scale agile across operations, not only in pilots, have seen release cycles improve by a factor of ten, development costs drop by 20% to 50%, and marketing expenses fall by as much as 60%. These metrics show how agile, when deployed at scale, turbocharges innovation and efficiency.
Likewise, Ericsson flags that incremental releases and CI/CD pipelines improve network and software quality, leading new 5G core or BSS releases to be integrated quickly, rather than delayed in monolithic release cycles.
Evidently, the data show that agile telecoms organisations win. They grow faster, spend less and adapt swiftly to market shifts. As one telecoms CIO put it, today ‘every week and every dollar counts,’ and agility is how you make each count more. In an industry confronted with rising 5G and fibre costs, embracing agile is not just a buzzword; it’s become essential to survival.
Anna Ribeiro