- Rising electricity and diesel costs could raise telco opex and pressure margins
- Analysts are split over how much operators will be impacted
- Operators with more renewable energy sources will be more insulated and the crisis could accelerate telco transitions to renewables, MTN Consulting argued
Europe is bracing for a "long-lasting” energy crisis. The price per gallon for diesel in the U.S. jumped by nearly $2 across the board in March. Australia is scrambling to secure its fuel supply as gas stations run out of diesel. Little over a month in, the war in Iran is already having far-reaching impacts and now threatens to hit operators where it hurts: the bottom line.
Data centers get a lot of flak for their energy usage – and rightfully so – but telecom operators also account for a substantial portion of global energy consumption. Telcos used approximately 340.6 Terawatt hours (TWh) of energy in 2024, up from 330.5 TWh in 2023, according to MTN Consulting. And, in turn, that means a good chunk of their budgets goes toward powering their networks.
MTN found telcos spend an average of 4-5% of their operating expenses on energy, though some spend 10% or more. GSMA Intelligence put the number even higher, at 15-20% of opex. While telcos have leaned into renewable energy, 70-77% still comes from the grid, GSMA and MTN’s data shows. They also still rely on diesel generators as a source of backup power in case the grid goes down.
Thus, small changes in energy costs can have a big impact on operators.
How hard are energy prices hitting telcos' bottom lines?
Data about exactly how much the war is impacting telcos is still scarce – most operators have yet to report Q1 2026 earnings, which would be the first quarter to show an impact from the war’s effect on the energy markets. And analysts disagree on just how much telcos will feel the burn.
Recon Analytics’ Roger Entner and Daryl Schoolar both said they don’t believe rising fuel prices will impact telcos too much. Sure, operators need diesel for their service trucks and generators, but that figure is a pittance in the grand scheme of a telco budget. The bigger concern, they said, is the grid.
“Networks and facilities run off electricity, and those rates are set by the utilities,” Schoolar said. Even if utilities in the U.S. want to raise rates in response to the war and demand shifts, “that won't happen immediately because utilities are regulated and have to go to the regulators to make a new rate case.” It’s the same bureaucracy utilities have encountered when they tried to raise rates for large data center customers who are straining the grid.
That said, there are laws on the books in the U.S. that allow utilities to recover rising fuel and transmission costs by charging customers more. And at the start of March, Fitch Ratings noted electricity prices in Italy and Germany had already jumped 45% from February.
Will more telcos switch to renewable energy?
The question then comes down to the power generation source. Utilities (and customers) reliant on carbon-based fuel sources – including natural gas – will be more susceptible to price increases.
“You could easily see some telcos increasing their energy OpEx by 30-50%, and that impacts margins,” Matt Walker, MTN Consulting’s chief analyst, told Fierce. “The ones who are most reliant on carbon-based energy as opposed to renewable energy will be most impacted.”
According to MTN’s recent report, that cohort might include cable operators like Comcast and Charter Communications, as well as Lumen Technologies, Millicom, Ooredoo, Veon and Zain.
On the flip side, those who have led the way on the adoption of renewable power – like Telefonica, Swisscom, Tele2 and KPN – will be more insulated. In fact, Deutsche Telekom, Turkcell, Telia, Liberty and Telecom Italia have actually started producing their own power via solar panels installed on their cell sites, MTN’s report noted.
Walker also warned that persistent high prices could cause “a recession or worse” – and he's not the only one sounding alarm bells. Since telco demand is “closely linked to GDP fluctuations,” such a slump “will hit telco revenues – especially for devices and new services," he said.
On the power front, Walker noted there are a range of actions operators can take to reduce consumption depending on the current state of their network, including everything from infrastructure consolidation and modernization to using AI to optimize fleet routes, HVAC usage and traffic steering.
But the biggest takeaway, he said, is that the energy crisis could push more telcos to accelerate their transition to renewable power.
“Cost is not really the issue. It’s more about complacency and the power of the status quo. The people who work for telcos have an opportunity to turn this crisis into something good by forcing fast action,” Walker concluded.