The demand for build-out of AI-ready physical infrastructure at national and global levels becomes evident as hyperscale initiatives cannot be realized without telco infrastructure, and telco infrastructure is being upgraded to meet the AI era.

Telcos, with their existing fiber backbone, spectrum holdings and rights-of-way, are the open partners for hyperscalers seeking to extend that compute into new geographies. In Australia, Telstra Group Ltd. and Google LLC announced an infrastructure-sharing arrangement in June 2026 in which Google secured dark fiber capacity on Telstra's Aura Network, while Telstra gained access to fiber pairs on Google's Tabua, Proa and Bulikula subsea cable systems — a mutual exchange aimed at eliminating single points of failure and positioning Australia as a regional connectivity hub linking Japan, the Pacific Islands and the US.

In India, Bharti Airtel Ltd. and Google are jointly investing $15 billion over five years (2026-2030) to build India's first AI hub and mega data center in Visakhapatnam, Andhra Pradesh, incorporating a new international cable landing station and Airtel's intra-city and inter-city fiber network.

Meanwhile, in mainland China, a Chinese government-backed $295 billion five-year AI infrastructure plan is channeling sovereign investment into a nationwide network of AI data centers, primarily operated by state-owned carriers China Mobile Ltd. and China Telecom Corp. Ltd. and equipped with Huawei Technologies Co. Ltd. — an arrangement that has accelerated the original 2030 compute-network integration timeline to 2028.

As regulators are imposing tighter controls on national data, telcos, with their existing domestic footprints and long-standing government relationships, are positioning themselves as the sovereign layer through which hyperscaler capability is delivered.

In Indonesia, PT Indosat Tbk (Indosat Ooredoo Hutchison) partnered with Google to deploy the country's first sovereign cloud and edge cloud solutions through Google Distributed Cloud, enabling public-sector agencies and industries — including defense, health care, financial services and energy.

KT Corp. and Microsoft Corp. launched a five-year, multi-billion-dollar partnership in South Korea in 2024 to develop Korea-customized AI models through Azure OpenAI Service and deliver sovereign cloud solutions for regulated sectors via KT's Secure Public Cloud, built on Microsoft Cloud for Sovereignty.

In Thailand, Advanced Info Service PCL Business launched a hyperscale cloud platform fully operated by a Thai company, built on Oracle Corp. Cloud Infrastructure, with local data centers governed by Thai law.

AI has transformed how telcos interact with the business through the use of LLMs and AI agents for customer service and engagement.

In 2021, Singtel Optus Pty. Ltd. (Optus) deployed Google Cloud's Contact Center AI solution, implementing the technology and reporting that automated digital tools handled 84% of customer inquiries. In Japan, SoftBank Corp. partnered with Microsoft to build an AI-powered call center using Azure OpenAI and Microsoft Foundry, designed to address Japan's labor shortages by creating an autonomous customer service infrastructure that delivers human-like interactions.

Meanwhile, China United Network Communications Ltd. (China Unicom) deployed a smart customer service system built with Baidu Inc., through AI-powered speech and semantic recognition across fragmented provincial channels, while in the Philippines, Globe Telecom Inc. launched Google Agentspace — a platform connecting business applications — in partnership with Google and Searce.

The modernization of network operations through automation and intelligent management represents another convergence.

In Australia, TPG Telecom Ltd. deployed AI agents for network operations automation using Amazon Web Services Inc.'s Amazon Bedrock, achieving automated procedures and proactive network intelligence.

In mainland China, China Mobile and Huawei deployed the IntelligentRAN solution — featuring full-stack AI integration across more than 500,000 sites — to address experience-network misalignment, improve network fault diagnosis, and reduce energy consumption, while China Mobile (Guangdong) deployed an AI Account Manager Assistant built on Huawei's own large language model engine, achieving a 30% reduction in average business processing time and supporting over 150,000 scenario invocations.

In Malaysia, Celcomdigi Bhd. signed memorandums of understanding with Huawei and ZTE Corp. to integrate AI-powered fixed-mobile convergence, intelligent deep packet inspection, and automated operations and maintenance into Malaysia's next-generation network, and in Indonesia, Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (Telkom Indonesia) partnered with International Business Machines Corp. (IBM) to deliver sovereign AI solutions built on watsonx, enabling businesses to build responsible AI services within Indonesia's own data residency boundaries.

The deep integration of telco connectivity with hyperscaler compute strengthens the bond between telco and cloud companies.

An example of this is the multi-access edge computing deployments across the region, where 5G networks and cloud infrastructure are being merged into a single offering. Telstra and Amazon Web Services (AWS) built a joint Centre of Excellence, combining Telstra Purple and AWS Professional Services to develop differentiated edge computing solutions that eliminate latency by routing traffic on-network, targeting industries including manufacturing, health care, gaming and autonomous equipment.

In Japan, Rakuten Symphony partnered with Google to accelerate edge cloud transformation by deploying AI-driven applications at distributed locations with localized connectivity and processing power, addressing the needs of enterprises in retail, manufacturing and fast-food industries, while NTT Docomo Inc. collaborated with AWS and Accenture PLC to build an AI governance platform on its Universal Wallet Infrastructure, embedding identity, credential and policy controls into agentic AI workflows.

Access the spreadsheet about the partnership imperatives between Asia-Pacific telco operators and global/regional hyperscaler companies.

Telcos are leveraging assets built over decades, which hyperscalers need to extend their reach. In exchange, telcos gain access to cloud infrastructure, AI models and engineering talent that would take years and billions to build independently, while hyperscalers gain physical presence, local credibility and regulatory standing.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.