The start of a new report from McKinsey & Company notes that the period from the late 2000s to 2015 was a difficult one for telecommunications operators. They battled through an era of increasing competition and “crushing capital burden” while competitors — large companies and startups — used the networks they pioneered to thrive.

The report goes on to say that the telecommunications sector has a chance to improve its fortunes. The organization identified four high-level changes that will be necessary to make this happen:

AI-native transformation. Comprehensive, artificial intelligence (AI)-driven reinvention of the end-to-end processes and operating model across all functions requires the ability to partner strategically with hyperscalers, system integrators, and solution and change management specialists. Telecommunications companies must harness the technology and data to help automate workflows and break down legacy silos and fragmented systems, the report said.

Growth beyond the core. Healthy, long-term growth requires AI to redefine consumer and enterprise value propositions through hyper-personalized, automated engagement, both with core offerings as well as an expanded, diverse portfolio of low-cost adjacent products and services.

Infrastructure innovation. As sovereign AI and data infrastructure become strategic differentiators in select markets and ownership models evolve to unlock capital and increase asset utilization, rethinking and upgrading legacy systems and technologies is critical.

Market shaping. In an industry becoming increasingly commoditized, telecommunications companies must navigate market dynamics and regulatory environments, the report said. Structural transformation, such as the delayering of infrastructure or carve-outs of non-core assets, and continued consolidation, remain critical, but only if pursued as part of a broader, holistic strategy and transformation.

If correctly implemented, the results could put the struggles of the earlier period into the rearview mirror. Telecommunications companies “could increase the industry’s lagging ROIC [return on invested capital] rates and lay the foundation for renewed top- and bottom-line performance, which could in turn lead to more favorable market valuations,” the report said.