Asia’s telcos bundle AI into mobile plans. Will it pay off?

Over the past two years, telecom firms across Asia have struck deals with AI companies to bundle cheap AI access into their phone plans, helping them retain customers and giving them a timely story for investors. Whether this is also bringing in direct revenue is less clear.

Some firms partner directly with frontier model developers like OpenAI or Google to give customers exclusive use of a single model. Others are working with companies like AI Fiesta, an India-based aggregator that bundles over a dozen AI models into a single subscription.

Image credit: Ulla

Singapore telco Circles Life has built its own aggregator, while SK Telecom in South Korea took an equity stake in AI firm Perplexity worth US$10 million.

Whatever form the deals take, AI companies get new users with minimal friction, tapping into relationships that telcos already have with their customers. Telecom operators, in turn, get a new way to keep people on the network and stand out from rivals.

“I assume telco firms are hoping these partnerships will be a revenue driver for them,” says Marina Koytcheva, research director at consulting firm STL Partners. “It’s low-risk and low-reward.”

But Koytcheva isn’t certain anyone’s cracked this approach. “I don’t think any of the telco firms have determined how much of the market is willing to pay for AI,” she adds.

“More than just a telco”

For now, most network operators are simply reselling AI access, taking a fee or a share of revenue for opening their customer base to an AI partner. Circles Life chose a different, more costly route. The firm built its own AI aggregator, giving users access to six frontier models through a single subscription.

Circles Life pays the AI companies for every token its users consume on its platform. The firm did not share its rates with individual partners or how much the arrangement costs it per month. Publicly available pricing shows, however, that input tokens for older frontier models from OpenAI and Anthropic can cost US$1 to US$1.50 per million, while output tokens run from US$6 to US$7.50 per million.

Without knowing how many tokens its users consume each month, it’s impossible to say whether Circles Life’s economics work. The company declined to share details.

Circles Life is the first digital telco in Singapore. / Photo credit: Circles Life

Fabian Sossa, Circles Life’s vice president of global and corporate marketing, says the model works, describing it as “sustainable portfolio economics, not simply reselling tokens one prompt at a time.”

He says since integrating AI, the company has seen a 9% cut in customer churn and a 22% jump in average revenue per user, or ARPU, a metric telcos track closely.

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