EM telecoms: from price wars to pricing power

AI has driven a major rerating across almost every visible part of the data value chain, from chips and cloud to data centres and power equipment. Yet telecom operators remain largely unloved, despite owning the networks through which that data must ultimately travel. They are, in effect, the highways of the digital economy.

This disconnect is particularly interesting in emerging markets (EM). Many EM telecom markets are moving from fragmented price wars towards more rational industry structures, just as 5G is allowing operators to carry larger volumes of data at lower unit costs. The result is a sector that may be shifting from capex-heavy competition towards pricing power, operating leverage and renewed strategic relevance.

From data boom to margin squeeze

The last mobile data boom should have been a golden period for telecom operators. Smartphones became essential, consumers spent more time online, and 4G made social media, streaming, gaming and mobile entertainment part of everyday life. It was the digitalisation of leisure, and telecom networks enabled it. Yet for many operators, especially in EM, the result was not stronger returns. It was margin pressure.

Source: Cisco Visual Networking Index (VNI), Bloomberg, June 2026

The problem was that data usage grew faster than monetisation. In many EM markets, 3G arrived later than in developed markets, leaving operators with a shorter window to earn returns before 4G required another major round of investment. At the same time, competition was intense. Regulators pushed for lower prices and smaller challengers used aggressive tariffs to win share. Consumers used more data without operators being able to charge meaningfully more for it.

That pressure eventually changed the shape of the industry. Price wars weakened smaller operators, made it harder to fund new infrastructure, and forced consolidation. In several markets, crowded competitive structures have given way to three-player or even two-player markets. That is why the next data cycle may look different. AI could drive the digitalisation of labour just as 4G drove the digitalisation of leisure, but this time it is arriving in markets with more rational competition, lower unit data costs and a better chance of monetising rising usage.

The overlooked data highways

This is the part of the AI debate that markets appear to be overlooking. The visible enablers of AI – from semiconductors and cloud platforms to data centres, power equipment and cooling systems – have all been rewarded. Telecom operators have not benefited to the same degree, despite owning the networks through which data ultimately has to move.

That feels like a disconnect. AI is not only a computing story – it’s also a data movement story. Whether the use case is AI services delivered from the cloud, enterprise automation, connected devices or edge computing, data needs to travel between users, devices and infrastructure. Data centres may be the factories of the AI age, but telecom networks are the highways that connect them.

The timing is important. Operators are not starting from zero. Years of investment in 4G and 5G mean many networks can already carry much higher volumes of traffic, while 5G reduces the unit cost of data. Ongoing investment will still be needed, but the opportunity may come through better utilisation of existing infrastructure rather than another speculative build-out cycle.

The other key difference is competition. In the last data cycle, rising usage was often competed away through aggressive pricing, particularly in markets with too many operators chasing share. That backdrop is now changing. Across several EM markets, consolidation has reduced the number of players and encouraged more rational behaviour, giving operators a better chance of monetising the data growth that runs across their networks. This does not remove the risks from regulation or future investment cycles. It does, however, mean the next wave of demand is arriving in a more supportive industry structure than the last one.

The argument is not just theoretical. It is already visible in country-level industry structures.

Case studies: a global pattern

Brazil is one of the clearest examples. At its peak, the market had seven mobile operators competing across a continent-sized country that requires large and widespread infrastructure investment. Excessive competition eventually pushed Oi, one of the former big four operators, into bankruptcy, triggering a period of consolidation that left the market with three main players.

In today’s more rational environment, Telefonica Brasil has been able to adjust tariffs broadly in line with inflation, with competitors following a similar path. This has supported revenue and EBITDA (earnings before the impact of financing costs, taxes, and certain non-cash accounting charge) growth above inflation. Meanwhile, initiatives to improve customer stickiness have made the sector more attractive than it was during the years of destructive competition.

India shows how quickly industry economics can change when an unsustainable market resets. The disruptive entry of Jio intensified price competition in a sector already carrying high debt and heavy investment requirements. Tariffs fell sharply, weaker operators exited or merged, and the market eventually consolidated around three main players.

That reset has created room for margin repair. Since 2019, prices have risen materially, profitability has improved and capital discipline has strengthened. India remains one of the cheapest mobile data markets globally, but the direction of travel has shifted. The industry is no longer simply chasing subscriber growth at any price. It is beginning to monetise one of the world’s largest pools of mobile data demand more effectively.

India also has one of the youngest workforces of any major economy, alongside a large services export sector. If AI adoption becomes increasingly embedded in knowledge work, this could add another layer to already strong demand for connectivity and data usage.

Indonesia is at an earlier stage of the same process. Competition remained intense even after previous consolidation, particularly outside Java, where smaller players used aggressive pricing to gain share. This created the familiar risk of strong data growth but weak monetisation.

Recent mergers have improved the outlook. The combination of XL Axiata and Smartfren has helped reduce the market to three main players, creating scope for more rational pricing behaviour. Early signs of price repair are emerging, led in part by Telkom Indonesia. The thesis is less mature than in Brazil, but the direction is similar: fewer competitors, better pricing discipline and a greater chance of converting data growth into returns.

Taken together, these examples show why the opportunity remains selective. Consolidation can improve industry structure, but regulation, capital discipline and competitive behaviour still determine whether better structure translates into better returns.

Final thoughts…

EM telecoms are emerging from a decade in which they carried the data boom but captured too little of the value that came from the digitalisation of leisure. Heavy capex, fragmented competition and weak pricing power meant rising usage often translated into margin pressure rather than higher returns. That backdrop is changing. In several markets, consolidation has reduced competitive intensity, 5G is lowering the unit cost of data, and operators are becoming more disciplined in how they monetise capacity.

The timing matters. AI is likely to drive another step-change in data demand, yet markets have largely ignored the telecom networks through which that data will move. Chips, data centres, cloud platforms and power equipment have all been rewarded as AI infrastructure. Telecoms, the highways of the digital economy, remain priced more like legacy utilities.

Of course, risks such as regulation, spectrum costs and future investment cycles still matter. But in markets where industry structure has improved and operators can convert rising usage into operating leverage, EM telecoms look increasingly mispriced. The last data boom squeezed margins because telecoms were forced to fund the digital highways while others captured much of the upside. For the next leg of the journey, much of the road is already built.

Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.