The Opportunity for Telcos Presented by the Trend of ‘Sovereign AI’
Enterprises are shifting AI workloads on-premises or to hybrid environments for lower latency in real-time applications, better cost predictability, and full data ownership, moving away from public cloud dependencies.
The global demand for AI compute power is driving unprecedented growth in the data center industry, with projections estimating the AI data center market to reach $157.3 billion by 2034.
This surge is fuelled by advancements in machine learning, generative AI, and data-intensive applications across industries such as healthcare, finance, and manufacturing.
Data centers are evolving to meet AI-specific requirements, creating significant opportunities for industry channel partners and new venture entrepreneurs. Key opportunities include infrastructure development, advanced cooling solutions, energy-efficient technologies, GPU cloud services, and AI-driven data center management tools.
Sovereign AI
A key opportunity segment is defined by ‘Sovereign AI’, refering to the specific scenario of AI services that builds upon the concept of ‘Sovereign Cloud‘ hosting. This ensures that sensitive data and operations remain within the jurisdiction and under the control of that country’s laws and regulations, controlling where data and compute resources are located, how systems are managed and secured, who owns the intellectual property, and which jurisdictions govern compliance.
The market for sovereign AI is projected to reach $600 billion by 2030, with up to 40% of AI workloads potentially running in sovereign environments, especially in the public sector and regulated industries. However, only about 30 countries currently have in-country compute capabilities for advanced AI, highlighting a gap in supporting elements like energy systems, model development, and governance.
As you might expect governments are particularly focused on the topic. It is central to the UK’s plans for ‘AI Growth Zones‘ and the EU is planning ‘AI Giga Factories‘, highlighting the role these facilities will play in promoting and accelerating business and economic innovation.
Unlike sovereign cloud, which focuses primarily on data storage, sovereign AI extends to the full lifecycle of AI, including model training, inference, and application development. The trend is gaining momentum as nations and enterprises seek to reduce reliance on foreign tech giants, ensure data privacy, and align AI with local cultural, regulatory, and economic needs.
Opportunities for Telcos
McKinsey explores the market opportunity this presents for Telcos. Pioneers in this sector include Swisscom, and Telus who is building a Sovereign AI factory, to provide Canadian organizations with secure, high-performance AI computing infrastructure to develop and scale AI solutions locally, ensuring compliance with Canada’s privacy and security regulations.
In the feature video Usman Javaid explains how Orange Business joined the NVIDIA Cloud Partner program, enhancing its Live Intelligence GenAI platform with NVIDIA’s GPUs and software for secure, compliant, high-performance AI in European data centers, accelerating enterprise adoption while prioritizing data sovereignty.
Deutsche Telekom also announced a €1 billion partnership with Nvidia, on November 4, 2025, to launch the world’s first sovereign Industrial AI Cloud, an enterprise-grade platform for industrial applications.
Sovereign AI Services
Key opportunities include:
| Opportunity Area | Description | Potential Benefits |
|---|---|---|
| Design and Deployment of AI Infrastructure | Helping organizations architect sovereign AI setups, including GPU-centric hardware, data centers, and secure networks. This involves integrating open-source tools and vendor solutions from companies like NVIDIA, Dell, or Mirantis for on-prem or trusted partner-hosted environments. | Builds recurring revenue through implementation projects; positions partners as trusted advisors in reducing vendor lock-in. |
| Integration and Customization Services | Managing data pipelines, model training/inference, and hybrid GPU environments. Partners can customize AI models for local compliance and cultural relevance, using platforms like Mirantis k0rdent AI or NVIDIA-powered factories. | Enables faster deployments and differentiation; creates co-sell/re-sell models with vendors, as seen in offerings like BharatGPT for multilingual AI agents. |
| Ongoing Managed Services and Advisory | Providing lifecycle support for AI workloads, including operations, capacity planning, and strategic consulting on sovereign vs. public cloud trade-offs. This includes evaluating cost-effective private setups and ensuring regulatory adherence. | Generates steady, long-term income; enhances customer relationships with consistent performance and data control. |
| Partnerships and Ecosystem Building | Collaborating with governments, telcos, and hyperscalers to form public-private alliances. For instance, telcos like those partnering with NVIDIA are building sovereign AI factories, creating roles for channel partners in integration and go-to-market (GTM) support. | Accesses government-funded projects; expands market share in a $35–70 billion annual GPU-as-a-service market for telco-adjacent players by 2030. |
| Innovation in Specialized Solutions | Developing or reselling tools for sovereign AI in emerging areas like startups focusing on GDPR-compliant models or sector-specific applications (e.g., insurance chatbots). | Fosters resilience and competitive advantage; appeals to enterprises seeking tailored, independent AI for better decision-making and IP protection. |
These opportunities are particularly pronounced in regions with strong sovereignty mandates, such as Europe and Asia, where startups and enterprises are prioritizing digital independence. Hardware markets, like AI servers, are expected to grow to nearly $300 billion by 2025, with sovereign AI driving demand for customized, secure solutions from manufacturers like ASUS.
Challenges and Considerations
While promising, sovereign AI presents hurdles for channel partners. Acquiring expertise in GPU infrastructures, AI workflows, and advisory services is essential, as is navigating trade-offs like potentially lower model performance in localized setups or high upfront costs. Success requires upskilling teams and forming strategic alliances to balance global interoperability with local control.
Sovereign AI represents a paradigm shift toward digital autonomy, offering channel partners a pathway to high-value, service-oriented revenue streams. By evolving into AI ecosystem orchestrators, partners can drive innovation, support national priorities, and capture a share of this multibillion-dollar market. Early movers who invest in skills and partnerships will be best positioned to thrive in this landscape.
