Traditional B2C telco growth engines are increasingly constrained. Upsell opportunities face more challenges due to unlimited mobile voice and data plans, while fiber uptake is commoditizing previously premium, gigabit speed offerings. At the same time, many markets are running out of cross-sell opportunities due to fixed-mobile convergence (FMC) saturation; FMC has at least 50 percent penetration in major markets such as Belgium, Portugal, and Spain, with accompanying significant decline in linear TV viewership. Lastly, price increases are delivering decreasing returns, as less than 50 percent of headline price uplifts are typically retained once customers migrate to lower-priced, front-book offers.
As a result, telcos face a strategic question: whether to retain and maximize profitability via cost optimization levers or search for growth beyond the core. Our experience and research show that beyond-the-core value propositions can unlock new revenue streams, deepen customer engagement, and support long-term value creation; roughly 70 percent of consumers are willing to purchase or own at least one adjacent service via their telco provider.
Telcos are well positioned to capture this opportunity, given their trusted customer relationships, billing integration, extensive distribution and service footprint, and depth of proprietary assets such as data or existing partnerships. All these advantages are further accelerated by technological advancements (such as APIs and agentic AI) that make the expansion to new verticals easier than before. They are also reflected in rising telco investor expectations.
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What’s at stake?
The scale of the beyond-the-core opportunity extends well beyond incremental adjacency. By 2035, the integrated network economy (both B2B & B2C) is expected to represent a total global revenue pool of some $125 trillion. Within this, B2C-relevant connectivity adjacent domains such as housing (~$7.4 trillion), health (~$7.9 trillion), digital content (~$4.8 trillion), mobility (~$3.0 trillion), education (~$5.5 trillion), and B2C marketplaces (~$12.1 trillion), create meaningful headroom for telcos to expand their role in consumer value chains.
Beyond-the-core models also offer a structurally attractive financial profile. Distributor and B2B2C partnership models require limited incremental capital, leverage existing assets (retail, billing, customer care, field force), and can generate high-margin revenues while reinforcing the core business through higher engagement and reduced churn.
Importantly, investors increasingly recognize B2C and digital revenues as a driver of improved valuation multiples for integrated telcos relative to pure connectivity players.
The telco reinvention: How AI can fuel value creation
What’s happening?
Historically, beyond-the-core ventures have been difficult to execute. A previous McKinsey survey of top global telecom executives showed that a high share of new business builds failed or remained unprofitable in earlier waves of experimentation.1 Recent evidence, however, shows that several leading telcos are now generating meaningful revenues from beyond-the-core activities. These operators derive between 5 and 40 percent of total revenues from adjacencies such as fintech, insurance, digital media, energy, and security, corresponding to annual revenues of ~€1 billion to ~€15 billion. These players demonstrate that beyond-the-core models can scale when pursued with focus, the right operating model, and strong ecosystem partnerships.
What does it take to succeed?
Despite growing traction, beyond-the-core growth remains challenging, with the primary barriers being organizational and operational rather than strategic. Traditional telco structures—designed for scale, reliability, and cost efficiency—often lack the speed, experimentation, and customer-centricity required to execute ecosystem plays effectively.
Leading players address these challenges through an innovative, platform-led approach with clear organizational focus. Once a telco has found the right vertical(s) relevant to its footprint, success depends on rigorous execution, including operating model (structure, process, people, technology) and link to core business P&L accountability and shared targets and incentives with core business.
If early results in these verticals are promising, longer-term, scalable success requires “bringing it together.” This entails defining the overarching customer value proposition with strong ecosystem synergies. As part of this, it’s critical to have the platform-first proposition design centered on orchestration, integration, and bundling, rather than as standalone products.
