KPMG report highlights strong investment in agentic AI and education
In sum – what we know:
- ROI expectations – 84% of leaders expect positive AI ROI within 3 years; 22% anticipate it in 12 months or less.
- Agentic AI – 62% believe agentic AI will have a “transformational” or “significant” impact.
- Investment shift – 67% of companies are allocating up to 20% of their total budget to AI projects.
Telecom executives are placing major bets on AI paying off — and they’re not giving it much runway. KPMG’s 2025 Global Technology & Telecommunications CEO Outlook finds that 84% of industry leaders expect positive returns on their AI investments within three years, with roughly a fifth banking on even faster results of 12 months or less.
That confidence is translating into real budget commitment. Six in ten telecom companies are now directing up to a fifth of their total spending toward AI initiatives. Of course, conviction and execution are different things entirely. Implementation hurdles continue to stand between investment and actual business value, and whether the sector’s optimism holds up against operational reality is another question.
The spending
The mood in telecom boardrooms is notably bullish right now. Eighty percent of CEOs express optimism about their companies’ growth trajectories, and earnings expectations have shifted accordingly. Executives clearly believe their AI-centric strategies are setting them up for better financial performance, though macroeconomic pressures and execution missteps could easily complicate that picture.
The workforce side of this shift is proving trickier to navigate. 45% of CEOs point to technical capabilities and skills as barriers to AI deployment , while 39% are struggling to bridge the gap between what their employees can do today and what AI initiatives actually require. In response, nearly half of companies are investing in AI training across their organizations.
Challenges in AI adoption
For all the investment enthusiasm, telecom leaders are staring down some serious obstacles. Data quality looms largest — 59% of executives in the KPMG report name it the top anticipated challenge to their AI strategies this year. The logic is straightforward. Even the most sophisticated AI models produce unreliable outputs when fed messy data. This foundational problem could become the bottleneck that throttles the sector’s broader transformation ambitions.
Data privacy and cybersecurity concerns rank highly too. As AI systems consume and process ever-larger volumes of sensitive information, attack surfaces expand and regulatory attention intensifies. Ethical considerations are also weighing on executives, with 64% citing them as a key concern.
The cost of implementation is also a significant pressure point, with 50% of respondents citing it as a barrier to scaling up usage. Employee adoption remains a hurdle as well; 34% of CEOs are concerned about the ability of their people to culturally adapt to and adopt AI. When it comes to stakeholder reporting, leaders are prioritizing compliance — 53% prioritize reporting standards to meet investor and regulatory demand.
Beyond company-specific concerns, 39% of executives identify cybersecurity as the biggest factor driving short-term decisions, reflecting the extent of the cyber threat to networks and platforms. The risks of AI, in other words, extend well past any individual balance sheet.
Sector transformation
Companies are innovating rapidly just to stay competitive, and that pressure is shaping executive decision-making in real time. 32% of telecom CEOs say technological disruption directly influences their strategic choices, while 33% point to AI integration as a guiding factor.
Modernizing legacy infrastructure has become a critical priority. Leaders see it as a necessary foundation for deploying agentic AI at scale. More broadly, the sector is repositioning itself, moving away from traditional connectivity and toward what KPMG describes as “intelligent, customer-first tech-cos”. In other words, network services alone probably won’t sustain growth in a market that’s becoming increasingly software-defined.
Digitization and connectivity remain core operational priorities, cited by 26% of CEOs in the KPMG report as essential to hitting growth targets. But whether companies actually capture the value they’re projecting depends heavily on overcoming the data quality, talent, and adoption challenges constraining their AI efforts today.
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