Telecom sector posts 9% median TSR, outpaces equity costs over 2021–2025

Global operators lead returns, whilst AI adoption and agile networks are flagged as future value drivers.

Telecommunications companies recorded a median annual total shareholder return (TSR) of about 9% for 2021 to 2025, up from 4% in 2020 to 2024, according to the 2026 Telco Value Creators Report by Boston Consulting Group.

According to the report, the sector’s median TSR was above its cost of equity, estimated at roughly 6.5, and also shows that top-performing operators led the gains.

Global telcos delivered a median five-year TSR of 14%, whilst large national players, defined as those focused on a single geographical market with revenues in excess of $10b, and smaller operators posted a median TSR of 9%.

Infrastructure companies and asset-heavy spin-offs lagged with a median TSR of negative 4%.

Over five years, the studied telcos generated a net $616b in value, measured as the cumulative change in market capitalisation plus dividends. Value creation was concentrated among a limited number of operators, especially those expanding in China, India, and other low- and middle-income markets.

Whilst artificial intelligence (AI) is seen as a potential driver of future value creation, the report notes that widespread AI adoption has not yet led to a sector-wide investor rerating with most telcos running AI pilot projects or launching AI-enabled services.

The report highlights that CEO-led transformation and the development of AI-based offerings will be key to future growth.

Other opportunities for telcos include shifting to agile, software-defined networks, improving capital productivity through spin-offs and network sharing, and pursuing targeted mergers and acquisitions, all of which could enhance future value creation, according to the report.