According to DCD, a new commentary from the credit rating agency Morningstar DBRS claims that sovereign AI development is a “material new business opportunity” for telecommunications companies. The report states that telecoms are “well suited” to drive these national AI infrastructure projects due to their experience managing large networks and existing partnerships with data centers and power producers. It highlights specific examples, like Canadian telco Telus deploying a “sovereign AI factory” with Nvidia and Deutsche Telekom reportedly in talks to build an AI data center in Germany. The analysis concludes that this part of the industry is set for “meaningful” expansion over the next five years, and telecoms that move quickly will be best positioned to capture government and enterprise market share.
Why Telcos Have The Upper Hand
Here’s the thing: this isn’t just about having some extra server space. The report makes a compelling case that telcos are uniquely positioned for this moment in a way that pure-play cloud giants or startups aren’t. They already own and operate the literal backbone of a country—the fiber networks. They’re already deeply regulated, know how to navigate government contracts, and are seen as (relatively) trusted national stewards. Building “highly sensitive sovereign AI infrastructure” isn’t just a tech problem; it’s a compliance, security, and political partnership problem. Telcos have been solving that for decades.
The Sovereign AI Rush Is On
So what does this actually look like? We’re seeing the early moves now. It’s Telus in Canada. It’s Deutsche Telekom in the EU. It’s going to be every major national incumbent. They’re not just providing bandwidth; they’re integrating entire “factories”—data centers, power, cooling, and the secure fiber to link it all. This is a classic “land grab” phase. The report is clear: the window to capitalize is now, and the market share will go to those who move fast. Governments are terrified of being locked into a foreign AI stack, and they need a local, trusted partner. Who else would that be?
A Lifeline For A Struggling Industry?
Let’s be real. The traditional telecom business model is under constant pressure. It’s a capital-intensive grind with heavy competition. But this? This is a potential goldmine. Morningstar previously noted the industry is already looking to AI investment to maintain earnings growth. Sovereign AI infrastructure could be the jackpot. It’s a massive new revenue stream tied to national security and economic competitiveness—the kind of project that gets long-term, stable government funding. Basically, it transforms telcos from dumb pipe providers back into critical national infrastructure builders. That’s a powerful narrative shift.
The Hurdles Ahead
Now, don’t think it’s a sure thing. The report calls it “early stages” for a reason. Can these often-slow-moving telecom giants actually “move quickly” as Morningstar advises? Do they have the AI talent in-house, or will they just be the landlords for Nvidia and others? And what about the sheer power demand? The report mentions their “growing relationship with power producers,” which is a nice way of saying they need to secure a staggering amount of electricity—a huge logistical and political challenge itself. The opportunity is massive, but so is the execution risk. The next five years will show which telcos can truly build more than just networks.
