- A new report from Morningstar says “growth is still in the cards” for 2026 North American telecom market
- Supporting the developing AI ecosystem is an opportunity for telcos, according to the firm
- Morningstar said it expects “positive low-single-digit economic growth in both the U.S. and Canada in 2026”
Despite the war in Iran impacting shipping in the Strait of Hormuz, and geopolitical and economical challenges, the North American telecom market can expect low-single-digital economic growth in the second half of 2026, according to a new Morningstar report.
“We expect the North American telecom industry to remain in a low-growth environment in H2 2026, with a generally accommodative interest rate environment that should support continued network investment (including artificial intelligence (AI) and cloud-centric infrastructure),” Morningstar analysts involved in the North American Telecom Midyear Outlook: Balancing Growth, AI Investment, and Financial Discipline report wrote. “We also anticipate that telecom providers will place greater emphasis on differentiating their service offerings by providing value to the subscriber/customer and through an improved customer experience, with a focus on reducing churn and supporting margin performance.”
In the first half of 2026, telecom providers pursued cost savings, “including the use of AI to streamline operations and reduce churn.” The Morningstar analysts noted that these initiatives were a “highly effective strategy to maintain margin performance and put into practice the application of advanced AI-enabled management solution.” in the second half of 2026, year-over-year declines in APRU could be in the rear-view mirror as providers will turn their attention to upselling opportunities tailored to specific customer needs. “As a result, we anticipate 2026 EBITDA margin performance across the industry to be roughly in line with that of the prior year,” the firm’s report said.
Telecom’s role in AI ecosystem
Telecom providers have an important role to play in the AI ecosystem, especially on the infrastructure side but also in data movement, edge computing and AI-powered services. This role will continue into the second half of 2026 and beyond, noted Morningstar.
“Looking ahead, we expect facilities-based telecom providers to continue investing in enterprise-grade AI-enabled applications and expanding their presence data centers, either as infrastructure providers or owner-operators,” the firm said. “By leveraging their network expertise, vast asset bases, and understanding of the regulatory environment, telecom operators are well positioned to capitalize on growing AI-related demand. While the financial contribution from these businesses is relatively modest today, we expect AI-related services and data center operations to be increasingly meaningful and potentially profitable sources of revenue in 2027.”
Read more about the telecom market on Fierce Network
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