Telecoms companies are fast-moving and behave like agile software companies, while remaining locked in finance systems designed for a more sluggish, capital-intensive world. Such a mismatch between how work gets done and how money is planned, approved and reported has become an operational pain point, clouding decision-making, execution and innovation. This creates a gap between product groups that want to iterate in real-time and finance systems that are still tied to long investment cycles and heavy infrastructure, making it increasingly difficult to react to market needs and changing market conditions.
Annual budget process, tight capex budget and traditional ROI calculations are still the norm, even as product development occurs in shorter and quicker cycles with iterative releases and pivots based on customer feedback. This is mostly a problem that reveals an underlying constraint in decision-making and capital control, rather than a mere process problem. All of these trends are accelerating as telcos move towards cloud-native networks and platforms.
Analysys Mason cautioned that operators are increasingly pressured to dynamically reallocate capital as revenue growth flattens and technology cycles shorten, but most capital planning processes are still grounded in multi-year assumptions and static portfolio commitments. Reaching a peak at US$386 billion in 2022, the highest level of global telecoms capital expenditure, including non-operator investments, that amount had fallen by 9% to US$350 billion by 2024, indicating that the investment appetite is declining at a time when the need for operators to upgrade their networks and develop digital growth capabilities is increasing.
Capex rigidity emerges as the initial fault line. Network capex remains the biggest expenditure for operators and once the money is committed to radio roll-out or core network upgrade, it becomes very difficult to move it elsewhere. IDC pointed out that this capex bias hinders innovation spending and the pace of digital service development, despite the growing threat from hyperscalers and digital platforms.
Forrester’s research on agile financial planning makes a blunt point that traditional budgeting and funding models are increasingly unfit for agile delivery because they cannot support the flexibility and value orientation that iterative development demands.
In its ‘Digital Business Requires Agile Financial Planning’ report, Forrester argues that agile methodologies are driving organisations towards more flexible budgeting models, which is causing conflict with annual operating plans and static business cases based on upfront certainty instead of evolving market evidence. Therefore, agile programmes frequently have difficulty obtaining steady funding as they are not justifiable against static long-term assumptions that clash with predictable feature delivery, continuous learning and outcome-based value delivery.
Finance organisations, not surprisingly, rely on governance structures that emphasise predictability and risk management. However, the same set of controls can become a drag on systems that incentivise speed, learning and incremental advancement. McKinsey highlighted how hierarchical approval chains and annual investment meetings are, in fact, incompatible with agile portfolio management, which requires constant reprioritisation and outcome-driven funding decisions.
What this exposes is beyond a budgeting problem; more of a power structure problem. Decision rights over capital remain concentrated at the top, while product accountability sits lower in the organisation. Product teams are told to behave like start-ups, but they are financed like utilities. That contradiction limits strategic optionality and weakens operators’ ability to respond to market signals.
Operators begin to break this pattern
Vodafone restructured parts of its digital and IT funding into rolling investment cycles, linking capital release to clearly defined product outcomes rather than static project milestones. The strategy enabled faster scaling of platforms such as Vodafone TV and IoT, while minimising risks associated with sunk costs. According to Deloitte, operators that implement rolling funding models are able to optimise capital efficiency by constantly reallocating capital to projects that show real traction.
Meanwhile, Telefónica implemented venture-style governance for some of its digital assets. Telefónica Tech operates with staged investment tranches tied to commercial performance metrics such as customer acquisition, churn reduction and service attach rates. As of 2024, Telefónica facilitated the development and transformation of local ecosystems of entrepreneurship in Europe and Latin America, with more than €240 million invested in over 1,100 start-ups, as stated in its annual reports, and the company estimates having helped generate more than 10,000 highly skilled jobs. The shift reflects the evolving nature of business in Telefónica from designs on traditional net capex budgeting.
EY describes this as adaptive capital allocation, where funding decisions evolve alongside market evidence rather than being frozen at the planning stage.
In Northern Europe, Telia adjusted its cloud, data and IT transformation strategy to focus on simplified product portfolios and data-driven decisions, a transition that supports value-based investments and prioritisation rather than traditional budgeting alone. Telia’s ‘2023 Annual and Sustainability Report’ underlines its transition as a more analytics-led operating model, simplified product offerings and increased agility to bring better outcomes for customers.
Forrester’s ‘Digital Business Requires Agile Financial Planning’ outlines how traditional budgeting models, like fixed yearly plans and static business cases, are incompatible with the way agile delivery and continuous value creation need to work. The report singles out how agile methodologies promote flexible budgeting and how fixed budgets are often at odds with funding iterative projects.
In the Middle East, e& (previously known as Etisalat Group) implemented a staged investment model for its digital and fintech businesses, which releases capital based on customer growth, platform engagement and ecosystem expansion milestones. e& presents its transformation from a conventional telecom into a global technology and investment holding company, specialising in digitalisation, cloud, AI and diversified revenue streams, indicating a move towards performance-linked digital solutions business growth alongside the business of owning core connectivity.
Frost and Sullivan observes that such value-based metrics are becoming essential as operators are challenged to justify digital investments that have payback curves that are nonlinear and dependent on the ecosystem.
These changes are a symptom of a larger trend in which project financing is giving way to product financing. Instead of awarding large, long-term programmes at the outset, some operators issue smaller initial budgets, test hypotheses in the market, then increase funding based on proven value. Simon-Kucher’s Global Telecommunications Study 2025 reveals operators are realising 60% of their potential customer value and details how focusing on customer life-time value and engagement outcomes can help drive profitable growth in telecom markets.
Evidently, this is not easy. While rolling funding breaks entrenched budget habits, incremental investment requires tolerance for uncertainty and the discipline to kill weak ideas fast. Value-based metrics demand better data and harder decisions. But the alternative is worse. Operators clinging to rigid budget cycles and outdated ROI logic will keep starving digital growth while funding yesterday’s priorities.
The takeaway is blunt. The annual budget and capex tight-fistedness can in fact actively stifle agile delivery and digital value creation. Legacy ROI models still bias investment towards legacy assets rather than software-driven growth. Rolling funding cuts, risk of sunk costs and reallocating capital in accordance with real-market signals. Treating investment as a continuum brings venture-style discipline to room innovation, enabling promising products to scale faster.
Value-based metrics align finance with customer outcomes, not internal cost optics. But finance reform alone is not enough. Governance reform decides whether agile funding works at scale. Without changing who controls capital and how priorities reset, telcos will keep running modern digital businesses on financial logic built for a slower, asset-heavy past.
Anna Ribeiro