Techco 1.0: Enabling the Telco to Techco Transformation for Success in the Intelligent Era

Intelligent technologies have advanced by leaps and bounds over the past couple of years, bringing us ever closer to an age defined by digital and intelligence. DeepSeek has become a landmark success as the first open source and free state-of-the-art (SOTA) model at only a fraction of the training and inference costs of its predecessors. This breakthrough, along with advancements in other technologies, is pushing industries and consumers to adopt AI at unprecedented speeds. The compound annual growth rate (CAGR) of the global public cloud market reached 19% in 2024. Many hyperscaler operators, like Huawei Cloud, have also launched training and inference services. The Middle East and Central Asia are using connectivity technologies to stimulate demand for digital and intelligent operations. The region came together in 2024 to pursue their goal of becoming the world's first 5G Advanced (5G-A) Region (as shown in Figure 1), and many countries have released dedicated strategies for digital and intelligence, like Saudi Arabia's 10Gbps Society Initiative and the UAE's Strategy for Artificial Intelligence. These alliances and strategies are stimulating broad adoption of AI, 5G, and cloud in many industries. Per capita time spent on the Internet in Gulf Cooperation Council (GCC) countries now exceeds the global average by 2 hours. Consumers are also increasingly seeking immersive and multi-modal interaction experiences thanks to the emergence of new AI tools.

Figure 1: Carriers, regulators, and equipment vendors from the Middle East and Central Asia jointly launched the world's first 5G-A Region at the Telecom Review Leaders' Summit on December 12, 2024¹

The global carrier market stands to uniquely benefit from broad digital and intelligent transformation, as it provides new opportunities for carriers to grow and augment their influence, both in the countries where they operate and in the broader tech industry.

In 2012, carrier revenue accounted for up to 2.8% of global GDP, but this figure has now dropped below 2%. There are multiple reasons for this. Carriers, by and large, mainly provide "pipes" for their customers – connectivity services by way of networking. At the same time, many carriers have not acted quickly enough to capture early opportunities in digitalization, like those in the cloud and B2B domains. This leaves us asking one big question today: What percentage of global GDP will come from carrier revenue by 2030?

Going back to look at the Middle East and Central Asia, we are beginning to see many interesting examples of carriers repositioning themselves to successfully navigate this new phase of digital and intelligent transformation.

In December 2022, e&'s CEO first proposed a path that would help them transform from a telecom company (telco) into a more technology-focused company (techco)². Other carriers, like Zain Group, stc, du, and Omantel, released transformation strategies soon after. These strategies shared a number of goals: Continuous growth in their core businesses, more agile operations, and an expansion of their business boundaries to include fintech, cloud, data centers, industry digitalization, and more.

Servitization, platformization, and intelligentization

In November 2024, Huawei, carriers, and the SAMENA Telecommunications Council launched the Techco 1.0 initiative³. The initiative defined three core pillars of techco evolution (see Figure 2):

1. Business servitization: Offering all organization assets as a service.

This allows carriers to provide Experience as a Service; implement agile service provisioning, perception, and assurance; and provide one-stop and personalized products for end users, where every product is offered as a service. Business servitization is the focus of innovation.

2. Service platformization: Moving all service development and operations onto a unified digital platform.

This supports rapid service and ecosystem development and allows carriers to, at the architecture layer, use cloud foundations as platforms upon which they can aggregate service ecosystems. At the operations layer, carriers can also use this to transform their O&M and operations and implement converged data management and monetization.

3. Platform intelligentization: Evolving carriers' technology stack to prepare for the age of AI.

This allows techcos to embed AI into all of their businesses, operations, and infrastructure in order to improve efficiency and increase revenue, realizing AI for Techcos.

These three pillars provide direction for carriers looking to evolve their core businesses, expand into innovative new businesses, and transform and upgrade their business models, operations, and infrastructure. They specifically give full play to the advantages carriers already have in connectivity, and in their vast consumer bases, government and enterprise customer bases, and data pools. Together, they also help carriers tap into new value in industry digitalization and consumption digitalization.

We've defined a 3-by-3 approach carriers can use to achieve these growth goals. The approach covers three paths along which carriers can grow their core businesses, three new ways to expand into innovative businesses, and three new technological goals that will take carrier infrastructure into the future. This article will examine all nine elements of this approach through the lens of real-world projects being conducted by carriers in the Middle East and Central Asia.

Figure 2: Navigating carrier transformation with a 3-by-3 approach laid out in Techco 1.0

Core business upgrade: Three paths for unleashing user value

The first goal e& set out in its 2024 "4-D" strategy is "Doubling down on our core business." Specifically, through continuous evolution of their core business and strengthening their international operations, e& aims to achieve 6.1% and 10% YoY annual growth, respectively, in these two domains⁴. According to this strategy, the only way the carrier can increase its overall revenue would be steady development of their traditional mobile broadband (MBB) and fixed broadband (FBB) businesses throughout the course of transformation.

The techco transformation must enable carriers to achieve core business growth, and so the transformation must help carriers:

1. Extend the dimensions of monetization to leverage more 5G-A and 5G capabilities;

2. Extend their service offerings to cover more scenarios which will drive more value-added businesses based on scenario segmentation; and

3. Extend the benefits of intelligent operations so as to maximize the value of networks.

Extend dimensions: Exploring new MBB/FBB dimensions and improving business benefits

Similar to Maslow's hierarchy of needs, there is a hierarchy of user requirements when it comes to telecoms services. As the industry adopted every new generation of communications technology, from 2G onto 4G, it has been able to progressively meet – and monetize – these basic needs, first enabling modern person-to-person connection and communications, and then enabling more advanced information acquisition. Now that we have broadly adopted 5G though, a gap between technological advancement and monetization has started to grow. Market competition is hampered by the number of carriers offering very similar services. This limits revenue growth, even when traffic volumes increase. Much user demand for higher quality and differentiated experiences has also not yet to be addressed by the market (see Figure 3). An Omdia survey found that over 80% of users are more willing to pay 40% more for higher quality, differentiated services and experience.

Figure 3: Breaking down digital lifestyle requirements into Maslow's hierarchy of needs

Multi-dimensional MBB/FBB monetization will require carriers to explore and cultivate higher-tier user requirements. Carriers will also need to promote new offerings targeting these requirements by using the success cases from VIP users. As they upgrade their technologies and operations platforms, carriers will be able to monetize connection speed, latency, and uplink. These monetization models have already been proven viable by carriers in the Middle East and Central Asia.

• Speed monetization: General FBB package speeds have increased in countries like Saudi Arabia and Azerbaijan, while carriers in the UAE have begun releasing speed-based MBB packages to start moving away from their traditional traffic-based operations model.
• Latency monetization: The penetration of gaming users in GCC countries has exceeded 58%, and so some leading carriers in the region have released game acceleration services. One carrier released flexible fee charging on a daily, weekly, and monthly basis, increasing their number of paid game-acceleration users by 47%.
• Uplink monetization: Another carrier in Kuwait provided MBB hotspot acceleration in stadiums for the Arabian Gulf Cup to meet the service requirements of VIP users.

These new monetization models have benefited both users and carriers. More users are having their specific requirements met, user experience has become more predictable, and VIP users have better service perception with the VIP logo display. Carriers, in turn, have seen increased ARPU, improved VIP user camping rates, and more competitive business.

Extend scenarios: Improving customer stickiness and increasing revenue with multi-scenario services

Consumer digital lifestyle demands go beyond connectivity, which means there are many opportunities for carriers to maximize their share of the consumer's wallet by offering more scenario-based services on top of MBB and FBB communications services. Carriers in the Middle East and Central Asia have explored three paths that will help them extend scenario-based service offerings (as shown in Figure 4).

• Improving product capabilities: For example, by upgrading optical network terminals (ONTs) to support FTTR, promoting home storage sales, and upgrading set-top-boxes (STBs) to AI Home Hubs. More than 14 carriers in the Middle East and Central Asia have released FTTR packages.
• Developing cloud services: A dozen carriers are expected to launch cloud drive or cloud home monitoring services this year, which they build on top of their own cloud foundations.
• Building ecosystems: By leveraging their own channel and platform capabilities to facilitate the sales of ecosystem-based products and services, stc in Saudi Arabia has launched their first IoT smart home package, and du in the UAE has launched an on-board diagnostics (OBD) service package for vehicles.

Figure 4: Carriers in the Middle East and Central Asia have navigated three paths to extend scenario-based offerings

Extend benefits: Infusing intelligence into operations and synergizing processes to maximize asset efficiency

Carriers are facing new challenges when it comes to O&M due to the continuous evolution of their core businesses and networks. The primary solution to these challenges is to embed AI into operations, as this will better position them to not only improve the efficiency of their operations but also maximize the benefits yielded by these improvements. This shift from efficiency-focused efforts to benefits-focused can be achieved in two phases.

The first phase has carriers automate the management of their three value streams: user experience improvement, complaint handling, and network fault processing.

• User experience improvement: For carriers, a shift in focus of user experience from key performance indicators (KPIs) to customer experience indexes (CEIs) will result in a higher-level shift in focus from improving network quality to improving users' service experience. Service experience-based network evaluation and optimization, for example, can help carriers reduce video buffering time by 26%.
• Complaint handling: Carriers can apply AI to their experience and knowledge assets to improve customer service efficiency and user experience.
• Fault processing: Automation and AI technologies help improve overall O&M efficiency. One carrier, for example, has used their intelligent O&M platform to achieve an automatic alarm compression rate of 99.4%. Using automatic topology restoration and analysis of wireless and transmission networks, this carrier was able to analyze faults 33% faster.

The second phase of this shift will have carriers build synergies between their experience, maintenance, and network optimization processes to further improve their brand image and reduce service loss. One pioneer in this area has risen by 7 places in Ookla's global ranking and reduced its user complaints by 40% by coordinating their service operation center (SOC) and network optimization.

Infusing AI into operations not only helps carriers better meet user expectations, but also helps carriers improve O&M efficiency, minimize service loss, and enhance their brand perception. All these achievements eventually translate into core business growth.

Pushing business boundaries: Three new AI- and ecosystem-powered drivers of growth

Currently, many carriers are also looking to make breakthroughs in new markets by applying AI and cloud technologies while also leveraging their current advantages in their installed base markets. For example, in stc's "DARE 2.0" transformation strategy, "E" ("Expand scale and scope") refers to accelerating growth by expanding into the cloud, IT services, cyber security, and fintech fields⁵. Many carriers in the Middle East, Central Asia, and other regions around the world have been exploring such drivers of business expansion, and success, so far, has primarily been found in three areas.

New entry points: Reimagining gateways to digital and intelligent lifestyles to improve user stickiness

Two of the biggest opportunities for carriers lie in AI and inclusive finance. New AI applications are emerging every day, and carriers are uniquely placed to create points of entry for users who want to use this mass of new applications. At the same time, carriers' massive existing installed bases can allow them to act as points of entry for underserved populations seeking banking services. This market has significant potential as 27% of the world's adult population still lacks bank accounts, and 50% lacks access to credit cards. From a technical perspective, there are four services needed to create these points of entry:

• First, New Calling, which has been retooled to provide AI services for users. Kuwait's Zain Group has already rolled out 5G New Calling in the Middle East and Central Asia⁶, and 5G New Calling is expected to become broadly available in the region later this year.
• Second, fintech, which includes services like digital wallets and digital finance. In 2024, the UAE's du released du Pay, which has seen significant user growth in a short period of time and has become a benchmark for fintech development in developed markets⁷.
• Third, AI Home Hubs, which connect to the cloud to enable intelligent lifestyle services, and connect people and things to provide integrated video, audio and interaction capabilities for home users.
• Fourth is cloud phones which can also be deployed based on carrier clouds.

Each of these four areas allows carriers to provide a rich array of digital lifestyle services that reimagine points of entry to the digital and intelligent world.

New industries: Building integrated ICT technology advantages through network-cloud synergy

B2B services are a focal point of innovation for many carriers, but revenue from these services still only accounts for a small proportion of overall carrier revenue. The current approach for carriers to industry digitalization can be divided into three phases, as shown in Figure 5.

Figure 5: Carriers leading the digital and intelligent transformation

Figure 5: Carriers leading the digital and intelligent transformation

In the first phase, as resource service providers, carriers provide data center and private line services for OTT providers and large enterprises. Resources are provided through networks (the "pipes") and are not integrated. Most GCC carriers have already entered this phase as they have mature data center capabilities and have begun started DC-centric network construction.

In the second phase, as service providers, carriers provide lightweight integrated standard services, such as cloud services, site-to-cloud private line services, and campus coverage, which give full play to their advantages in connectivity and address the digitalization requirements of small- and medium-sized enterprises in a one-stop manner. Mainstream GCC carriers have entered this phase by deploying Managed Service Platforms (MSP) and they are exploring converged management of multiple products, including Wi-Fi, IdeaHub, and storage, in order to open up more space in managed services.

In the third phase, as integrated providers, carriers provide integrated data, information, and communications technology (DICT) services for industries. These offerings include cloud, AI, industry-specific private network, and ecosystem integration services. e& Enterprise and Solutions by stc have become top players in regional industry digitalization thanks to these kinds offerings.

Carriers can build unique competitiveness in the B2B field by transitioning from being resource-based to integration-based providers. By building network-cloud-intelligence synergy, carriers can lead the digital and intelligent transformation of industries.

New models: Driving new B2B2C models by opening up capabilities

Carriers currently have a wealth of user data, but have yet to leverage their mature O&M and operations capabilities and platforms to maximize the value of that data.

The first step to capturing this value will be managing basic data as an asset. Carriers will first need to transition from manual data management to tool-assisted management, which will allow them to process data as a standardized asset instead of on demand. This will improve data governance efficiency and utilization, as well as slash the preparation time for market analysis and decision-making.

Once data is managed as an asset, it can be better monetized. Externally, data can enable more effective industry-facing marketing, as one carrier in the Middle East and Central Asia has shown by working with a coffee chain to jointly carry out location-based real-time marketing. Together, they are able to send over one million targeted marketing messages a day, which has significantly improved their marketing success rate. Internally, based on the convergence of the operations support system (OSS) and business support system (BSS), carriers can use data to shift their marketing model to focus on precision targeting instead of broad coverage.

This two-step method of data governance has garnered the attention of many telecom CEOs. Meanwhile, to support business innovation, carriers' digital and intelligent infrastructure is also evolving.

Digital and intelligent infrastructure: 5G-A, All-Time Online, and AI-driven

5G-A/F5G-A: 10 gigabit intelligent networks with unparalleled user experience that empower immersive lifestyles

Intelligent applications raise higher-tier needs according to the "Maslow's hierarchy" we adapted earlier in this article. These applications set four requirements for network evolution:

• Ultra-broadband networking: 10 gigabit society requires MBB/FBB full-service capabilities that support 10 Gbit/s speeds. In May 2024, e& achieved 30.5 Gbit/s speeds over the 300 MHz C-band and 1600 MHz mmWave⁸. In Ookla's global network speed test in January 2025, the UAE ranked No. 1 in the world in terms of mobile network speed, and five of the top 10 countries with the highest network speed in the ranking were in the GCC.
• Ultra-low latency: All-domain latency must be reduced to milliseconds (≤ 1 ms in cities, ≤ 5 ms in countries, and ≤ 20 ms across the region) to support XR, smart education, and smart healthcare applications⁹.
• Deterministic experience: The commercial use of standalone (SA) networks and E2E slicing technology must be expanded to ensure differentiated SLAs in B2B/B2C scenarios.
• Intelligent service perception: Core network intelligent engines, such as the Network Data Analytics Function (NWDAF), are needed to help networks dynamically adapt to increasingly diverse service requirements.

All-Time Online: A highly reliable, ultra-stable architecture for all services in all scenarios

5G-A has unlocked a number of new full-service access capabilities. However, to make the most of these capabilities and ensure always-on services, carriers will need to implement three architecture standards.

• All-scenario access: With wireless networks, carriers must continuously improve edge coverage experience and plan uplink, positioning, and latency capabilities based on scenario-specific requirements. In November 2024, Saudi Arabia's Zain Group acquired the 600 MHz spectrum band to enhance these capabilities for areas such as IoT and smart city¹⁰.
• High-reliability bearing: As connection hubs, bearer networks must achieve 99.9999% reliability through hardware, software, and protocol collaboration. Carriers will also need to build a systematic security protection system to improve network resilience. In the Middle East and Central Asia, a number of carriers are already exploring these requirements and are expected to roll out related commercial solutions this year.
• Ultra-stable core networks: Core networks play a pivotal role in connectivity, with the disaster recovery and redundancy design of the core network architecture being of paramount importance. Trusted access must be implemented for network elements (NEs) along with other new intelligent O&M methods to further improve the security and stability of entire networks.

AI-Driven: AI in all services to maximize the value of AI

User behavior is shifting from being reactive and touch-based to being proactive and multi-modal thanks to mobile AI. This is pushing traffic models to focus not only on downlink, but also on uplink, and manual operations models are evolving to become more automated. These dynamics are reshaping carriers' businesses, operations, and infrastructure. As a result, Huawei is currently working with multiple carriers in the Middle East and Central Asia to explore the implementation of AI strategies in three main scenarios.

• Intelligent services: Implementing services like New Calling and AI Home Hubs in selected scenarios is effectively allowing carriers to leverage their existing capabilities and more effectively utilize existing infrastructure (filling the "pipes" with traffic) to increase revenue.
• Intelligent operations: Carriers introducing copilots and AI agents into high-value scenarios are proving able to ensure service development and improve user experience. Zain Group, e&, and stc have all released roadmaps for autonomous driving networks. Copilots and AI agents for L4 autonomous networks (ANs) are expected to enter commercial use in 2025.
• AI infrastructure: Technical foundations can be upgraded in anticipation of future requirements. In information storage and processing, future-ready foundations must be able to support AI DCs, AI-ready cloud, computing power centers, and Models as a Service. In information transmission, RAN networks need to upgrade to mobile AI RAN, and data center networks to computing networks.

Carriers are increasingly integrating AI into their services, whether it be internally to improve efficiency and productivity or externally to improve user experience. Further integration will ultimately enable the implementation of national AI strategies.

Huawei and the carriers of the Middle East and Central Asia are all working to explore what the techcos of the future will look like. Techco 1.0 is only the beginning. We look forward to taking this initiative further, and jointly innovating and creating value, so that all carriers can navigate the road to transformation and we can all grow and succeed together.