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From the e-newsletter (sign-up if you’d like it sooner): Robust quarterly outcomes from Verizon reinforce a broader shift throughout US telecoms: after years of heavy funding, cellular telcos are rising once more – and more and more pitching themselves not as AI adopters, however because the infrastructure powering the AI financial system.
Q2 2026 feels just like the breakthrough quarter for US telcos, perhaps. We have to take one other take a look at their European counterparts, and contemplate additionally completely different contexts. However having spent a little bit of time with AT&T, T-Cell, and now Verizon, there appears to be a sample. The previous telco story is enhancing: their investments are paying off, their subscriber additions look good, their churn is down, their margins are more healthy. They’re all speaking about sharper pricing self-discipline, as nicely – versus costly promotions for speculative acquisition.
And tellingly, they aren’t speaking a lot about AI simply as a instrument to automate their networks or enhance their companies. They’re more and more, and extra confidently, positioning themselves as infrastructure suppliers for the AI financial system. A few of that is prep-work, in fact; all of the cellular entry build-out in metro areas, together with buy of recent spectrum, is about placing AI to work on the edge, and totally on the transfer – a while in 2027/28, and doubtless later. However these of them with correct fiber footprints – AT&T and Verizon, notably – are seeing faster positive factors.
AT&T was fascinating final week, speaking about tips on how to orchestrate 43 billion each day inference tokens between telco-geared language fashions in its IT ecosystem. It appeared like novel pondering, and right-headed. However the dialogue that attended Verizon’s Q2 scores, truly from Friday (July 24), talked about the true fiber plumbing for AI – in methods the likes of Lumen, Zayo, and others have harped-on about for a number of quarters, not less than. So it was good for Verizon, and doubtless good for all diversified cellular carriers, to listen to about its $1 billion DCI cope with Google.
Greater than that, and perhaps simply to persuade buyers that AI will drive a brand new progress cycle, Verizon chief Dan Schulman went as far as to say that such offers will stack up in 2027, and create a brand new multi-billion-dollar income stream over the following 5 to 10 years. Margins from its AI Join portfolio – not simply from mega-sized DCI tasks, but in addition metro fiber, metro/edge information facilities, and varied edge companies (together with slicing and personal 5G); all bundled and orchestrated as a programmable enterprise layer – might be “equal to or better” than current connectivity traces.
What’s the quote from Schulman? “This can be a very completely different income progress profile than Verizon has had in a really very long time.” So second quarter, then, which could simply herald couple of years, not less than, for telcos – perhaps not sufficient to submit the form of double-digital progress that the likes of AMD et al, greater up the AI stack, have been recording quarter after quarter, however sufficient to seem like correct propulsion. As a result of AI wants networks, of some type, simply because it wants chips and fashions – and more and more in order AI workloads depart the information facilities. We’ll see.