Sovereign AI development represents a material new business opportunity for telecommunications companies, which are “well suited” to drive national AI infrastructure projects, commentary from Morningstar DBRS has claimed.

The global credit rating business said that the broad “democratization” of AI, combined with the new wave of “AI-driven innovation,” has resulted in sovereign AI infrastructure becoming a “national imperative.”

Telcos are well-positioned to support this, with their experience in the management of large communications networks and long-term partnerships with fiber networks and data centers, as well as a “growing relationship with power producers.”

“This core competence positions them well to integrate and build facilities and high-speed fiber networks to support sovereign AI development,” Morningstar said.

The commentary also noted the unique position of telcos in that they are already responsible for the design, construction, and maintenance of a critical piece of modern infrastructure – communications networks.

This means these companies are already compliant with the laws and regulations of their local jurisdiction and already possess long-term government relationships as a trusted partner, which is a major boon when developing “highly sensitive sovereign AI infrastructure.”

"Large national incumbent telecoms are well positioned to play an important role in the development and execution of national sovereign AI strategies," said Scott Rattee, senior vice president and team lead, Corporate Ratings at Morningstar DBRS. "Their core competence positions them well to integrate and build facilities and high-speed fiber networks to support sovereign AI development."

According to a previous Morningstar report, the telecommunications industry is already looking at AI investment to maintain earnings growth and market share.

Some telcos are already supporting sovereign AI projects, such as Canadian telco Telus, which has deployed a “sovereign AI factory” in Canada in partnership with Nvidia.

And just last week, reports emerged that Deutsche Telekom is in talks to build an AI data center in Germany as part of the EU's AI gigafactory fund, InvestAI.

“While still in the early stages of development and implementation, we believe that telecoms that are able to move quickly to capitalize on the opportunity to advance the development and application of sovereign AI plans will be best positioned to capture enterprise/government market share as this part of the industry is set to expand meaningfully over the next five years,” Morningstar said.