Telecom Cloud Market

On 7 May 2024, O2 Telefónica in Germany began moving existing mobile customers onto a 5G core network built by Nokia and running on Amazon Web Services (core software spend is sized in the 5G Core Market report), the first time a telecom operator had migrated a live customer base onto a 5G core in the public cloud. For two decades operators had run their networks on dedicated boxes and then on private clouds inside their own data centres; the move put a hyperscaler directly inside the most sensitive part of a national mobile network, and showed that the telecom cloud was no longer limited to billing and IT systems. Douglas Insights values the telecom cloud market at USD 31.6 billion in 2025 and forecasts USD 109 billion by 2035, a compound growth rate of 13.2%. The receipt is about 10.2 billion mobile and fixed broadband connections served by operators worldwide in 2025 at an average telecom cloud spend of USD 3.10 per connection a year. Connections grow 2.0% a year; cloud spend per connection grows 11.0% a year as operators move network functions, IT and edge services onto cloud-native infrastructure and buy more from public cloud providers. The report sits within Douglas Insights coverage of telecom and networks and follows the published Douglas Insights research methodology.

Which telecom cloud spending does this study count, and what sits outside the boundary?

The telecom cloud market covers what telecom operators spend on cloud infrastructure, platforms, public cloud services and cloud integration to run their own networks and IT, worth USD 31.6 billion in 2025 across about 10.2 billion connections. Private telco cloud infrastructure is the servers, storage and data centre networking operators install in their own sites to host virtualised and cloud-native network functions. Cloud platform software is the virtualisation, container and orchestration layer on top, such as Red Hat OpenShift, VMware Telco Cloud and vendor platforms from Ericsson, Nokia, Huawei and ZTE. Public cloud services are the infrastructure and platform services operators buy from Amazon Web Services, Microsoft Azure, Google Cloud and others for IT, analytics and, increasingly, network functions. Integration and managed cloud services cover migration, testing and operation. Radio baseband pooled on cloud servers is sized separately in the C Ran Cloud Radio Access Network Market report. The network function software itself, such as 5G core and radio software licences, enterprise cloud services that operators resell to business customers, and colocation revenue from third parties are outside the boundary, which is why published estimates that include resold cloud services are larger; the 5G Market report covers the wider 5G network build.

What does O2 Telefónica’s move to AWS mean for the telecom cloud market?

O2 Telefónica’s move to AWS, announced on 7 May 2024, shows how public cloud, about 28% of telecom cloud spending in 2025, can rise to about 40% by 2035, on Douglas Insights estimates. AWS described the project as the first migration of an operator’s existing network and customers to a cloud-based 5G core on AWS, using managed Kubernetes, compute, networking and encryption services, with Nokia supplying the core software. The operator said it chose AWS for data security and sovereignty capabilities, performance and elasticity. The move matters for three reasons. First, it breaks the assumption that network cores must run on operator-owned hardware, which opens the largest part of network spending to hyperscalers. Second, it shows the partnership model that is emerging: network equipment vendors supply the software, hyperscalers supply the infrastructure, and the operator runs the service. Third, it came as Broadcom changed VMware licensing after completing its acquisition in November 2023, which pushed many operators to review their private cloud platforms at the same time. Most operators are not following O2 Telefónica all the way: they keep cores on private or hybrid clouds and use public cloud for IT, analytics, testing and new services. Douglas Insights expects hybrid models to dominate through 2035.

Why are operators moving telecom cloud workloads off their own hardware?

Telecom cloud demand is driven by four forces, and Douglas Insights attributes 2.0 points of the 13.2% annual growth to more connections and 11.0 points to higher cloud spend per connection.

5G standalone cores need cloud-native infrastructure. Unlike earlier generations, the 5G standalone core is designed as software microservices running in containers, so every operator launching standalone 5G builds or buys a cloud platform. Every standalone launch therefore books a platform purchase, and network core workloads take about 29% of telecom cloud value in 2025, USD 9.16 billion.

IT and BSS modernisation moves to public cloud. Billing, customer care, analytics and data platforms are the easiest workloads to move, and most large operators have multi-year deals with hyperscalers to migrate them. That is why public cloud bought by operators reaches USD 8.85 billion in 2025 and compounds 19.0% a year, ahead of every other layer.

Cost pressure favours automation. Operators with flat revenue use cloud platforms to automate network operations, cut energy use through workload consolidation and shorten the time to launch services. Cloud platform software carries USD 6.32 billion of that spending in 2025 and compounds 13.5% a year.

Edge and enterprise services add new workloads. Private 5G networks, multi-access edge computing and low-latency services for factories, ports and stadiums run on distributed operator clouds, and Douglas Insights estimates edge and enterprise workloads at about 21% of value, USD 6.64 billion, growing faster than core network workloads.

Sovereign cloud demand creates a new category. Governments and regulated industries want cloud services that stay under national control, and operators in Europe, the Gulf and Asia are building sovereign clouds, often with a hyperscaler’s technology running in the operator’s own data centres. Douglas Insights estimates that sovereign and operator-hosted hyperscaler platforms account for about 6% of telecom cloud spending in 2025, and that the share will roughly double by 2030.

Cloud RAN opens the radio network. Running radio baseband software on general-purpose servers, as in AT&T’s open radio network programme with Ericsson announced in December 2023, extends the telecom cloud to cell sites; Douglas Insights estimates cloud RAN at about 8% of value, USD 2.53 billion, the smallest but one of the fastest-growing workloads; the 5G-Advanced radio units and small cells those servers drive are counted in our Next Generation Wireless Communication Market report.

What holds back telecom cloud adoption when a 5G core counts as critical infrastructure?

Operator capital cuts, sovereignty rules and integration complexity hold back the telecom cloud market, and Douglas Insights estimates they take about 3 points a year off value growth. Operators’ total capital spending has fallen since the 5G build-out peak, and many are cutting headcount and deferring projects, which slows new platform purchases. Governments treat telecom networks as critical infrastructure, and rules on data location, lawful interception and foreign suppliers limit how much of a network can run on a public cloud controlled from abroad; in the European Union, the 5G security toolbox and the NIS2 Directive add further requirements. Integration is hard: operators must make software from many vendors run reliably on shared infrastructure, and several early telco cloud projects ran late and over budget. Finally, the VMware licensing changes after Broadcom’s acquisition raised costs for some operators and forced migrations that consumed budget without adding capability.

Which telecom cloud layers carry the most value, from operator racks to hyperscaler bills?

Private telco cloud infrastructure is the largest telecom cloud segment at 34% of 2025 value, USD 10.7 billion, and public cloud services are the fastest-growing segment at 19.0% a year.

Private telco cloud infrastructure holds USD 10.7 billion. Servers, storage and data centre networking inside operator sites still host most network functions, and the replacement cycle alone carries 8.5% a year. The halls that house those racks are sized separately in our Modular Data Centre Containment Systems Market report.

Public cloud services take USD 8.85 billion and compound 19.0% a year, the fastest layer, as operators rent compute, storage and platform services from hyperscalers for IT, analytics and a widening slice of network work.

Cloud platform software accounts for USD 6.32 billion at 13.5% a year, the rate at which container, virtualisation and orchestration licences replace virtual-machine estates with cloud-native designs.

Integration and managed cloud services add USD 5.69 billion at 13.0% a year, the fee for making migration, testing, automation and day-to-day operation work across many vendors.

By workload, IT and business support systems take 42% of value, USD 13.3 billion; network core 29%, USD 9.16 billion; edge and enterprise services 21%, USD 6.64 billion; and cloud RAN 8%, USD 2.53 billion.

How do private, public and hybrid telecom cloud models compare?

Private telecom cloud still hosts about 72% of operator cloud spending in 2025, but public cloud is growing more than twice as fast, on Douglas Insights estimates, and most large operators now run a hybrid of both. A private telco cloud gives the operator full control over hardware, location, security and latency, which suits network cores, lawful interception and services that must stay inside national borders, but it requires large up-front spending and specialist staff. Public cloud turns that spending into a monthly bill, provides automation tools and global scale, and lets operators test and launch services quickly; its drawbacks are dependence on a foreign provider, egress charges and concerns about how a hyperscaler outage would affect a national network. Hybrid models run steady network functions on private infrastructure and use public cloud for IT, analytics, peaks and new services, and hyperscalers now sell on-premise versions of their clouds, such as AWS Outposts and Azure’s operator offerings, to bridge the gap. Douglas Insights expects the balance to shift toward public cloud for IT and edge workloads while cores stay mainly private or hybrid.

How is artificial intelligence changing telecom cloud spending?

Artificial intelligence workloads took about 5% of telecom cloud spending in 2025, on Douglas Insights estimates, but they are changing what operators buy. Operators use machine learning to predict network faults, optimise radio energy use and route customer calls, and these tools need GPU capacity and data platforms that most operators rent from public clouds. A second wave is under way: operators such as SoftBank and others in the AI-RAN Alliance, formed in February 2024 with Nvidia, Ericsson, Nokia and cloud providers, are testing radio networks that run on GPU servers, so the same hardware can process radio signals and sell AI computing to customers at the edge. Several operators have also announced national AI computing centres, which blur the line between the operator’s own cloud and a service sold to others. Douglas Insights counts only the AI capacity operators use for their own networks and IT in this market; capacity sold to customers is excluded. Even so, AI raises spend per connection because it adds compute-heavy workloads to cloud platforms that were sized for network functions, and Douglas Insights expects AI to account for about 15% of telecom cloud spending by 2035.

Where is telecom cloud bought, from China’s state operators to Gulf sovereign builds?

Asia Pacific buys the most telecom cloud, 38% of 2025 value or USD 12.0 billion, while the Middle East is the fastest-growing region at 14.9% a year. Asia Pacific leads because China’s three state operators run some of the largest telco clouds in the world, built on domestic suppliers, and operators in Japan, South Korea, India and Australia are building standalone 5G; it grows 13.7% a year. North America is worth USD 9.48 billion and grows 12.7% a year, with the closest ties between operators and hyperscalers. Europe, at USD 6.95 billion, grows 12.3% a year, shaped by sovereignty rules and cost pressure. Latin America, at USD 1.58 billion, grows 13.9% a year as America Movil, Telefónica and others modernise. The Middle East, at USD 1.11 billion, is the wildcard: Gulf operators such as e& and stc are building sovereign clouds with hyperscalers and could exceed the 14.9% base case. Africa, at USD 474 million, grows 14.4% a year as MTN, Vodacom and Airtel Africa move IT to the cloud.

Who supplies telecom cloud, and how is the supply base splitting in two?

Huawei leads the telecom cloud market with an estimated 12% of 2025 value, and the top three suppliers hold about 28%, on Douglas Insights estimates.

Huawei’s lead rests on China, where it and ZTE supply most operator clouds, and on emerging markets in Asia, Africa and the Middle East. AWS, Microsoft and Google compete to become the default cloud for operator IT and to host network functions. Ericsson and Nokia sell their own platforms but increasingly certify their software on hyperscaler clouds and on Red Hat. Red Hat gained customers after Broadcom’s VMware licensing changes. Integrators such as Accenture, Tech Mahindra and Amdocs win migration and operations contracts. Douglas Insights expects the telecom cloud to split into two supply chains, one Chinese and one Western, with little overlap.

How is telecom cloud priced?

Telecom cloud spending ranges from under USD 1 per connection a year for small operators in emerging markets to more than USD 10 for large, advanced operators in the United States and East Asia, and the Douglas Insights average is USD 3.10 per connection in 2025. Private telco cloud infrastructure is bought as capital equipment, with a telco-grade server costing about USD 10,000 to 40,000 and a regional data centre pod several million dollars. Platform software is licensed per core, per node or per subscriber, typically USD 1,000 to 5,000 per server a year. Public cloud is billed by use, and multi-year commitments of USD 100 million to more than USD 1 billion are common for large operators moving IT. Integration services are priced per project. Egress fees for moving data out of public clouds and energy costs for private data centres are often the hidden items that decide which model is cheaper over five years. Spend per connection grows about 11.0% a year as more workloads move to cloud platforms.

How could the telecom cloud forecast change by 2035?

The telecom cloud forecast ranges from about USD 68.7 billion to USD 164 billion in 2035 across Douglas Insights scenarios, around a base case of USD 109 billion. A slower path puts connections at 1.0% a year and spend per connection at 7.0%, the shape of a decade in which capital budgets keep shrinking and regulators fence networks off from public cloud. A faster path puts them at 3.0% and 14.5%, the shape of one in which hyperscalers host most new 5G cores and 6G is drawn cloud-first from 2030. Each 1-point change in connection growth moves the 2035 figure by about USD 11.2 billion. Published forecasts sit between about 21.8% and 27.0% a year, well above Douglas Insights’ 13.2%, because this study excludes cloud services operators resell to enterprises and counts only operators’ own spending.

Douglas Exclusive: telecom cloud workload migration tracker

The Douglas Insights telecom cloud workload migration tracker follows about 120 operator groups and records where their network core, IT, analytics and edge workloads run: operator private cloud, hybrid or public cloud, and on whose platform. It shows that about 15% of 5G standalone core capacity outside China ran on public or hyperscaler-managed infrastructure in 2025, that more than 70% of large operators had moved at least part of their IT to public cloud, and that VMware replacement projects were under way at about a third of European operators. The tracker also lists each operator’s main cloud partner and contract renewal dates, so suppliers can see which workloads are likely to be re-tendered in the next two years.

Which regulations and standards shape the telecom cloud market?

Security, sovereignty and standards rules shape the telecom cloud market, and Douglas Insights estimates that about 60% of 2025 value is bought under national security or data localisation requirements. In the European Union, the NIS2 Directive, which member states had to apply from October 2024, treats telecom operators as essential entities with strict security and incident reporting duties, and the EU 5G security toolbox recommends restricting high-risk suppliers. China requires data on its networks to stay in the country and favours domestic suppliers. Industry standards from 3GPP define the cloud-native 5G core, ETSI’s network functions virtualisation specifications set how network software runs on cloud infrastructure, and the O-RAN Alliance defines open interfaces for cloud RAN. Lawful interception and emergency service rules apply wherever the network runs, which limits how operators can use foreign public clouds.

What methodology sits behind the telecom cloud market model?

The telecom cloud market model is a bottom-up count across 40 countries: Douglas Insights multiplied about 10.2 billion mobile and fixed broadband connections in 2025 by an average telecom cloud spend of USD 3.10 per connection a year to reach USD 31.6 billion. Connections came from operator and regulator data. Spend per connection was built from operator capital and IT spending, the share moving to cloud by workload, and hyperscaler and vendor disclosures of telecom revenue. Shares for leading suppliers are Douglas Insights estimates. The Enterprise Data Observability Platforms Market report covers monitoring tools operators also buy for their cloud data platforms. Full receipts are in the Douglas Insights research methodology.

Sources

1. Amazon Web Services O2 Telefónica moves its 5G core network to the cloud with AWS and Nokia (7 May 2024) (2024)
2. EUR-Lex Directive (EU) 2022/2555 (NIS2) (2022)