techUK insight: DSIT publishes Advanced Connectivity Technologies sector study

The technologies and services included in this study were identified through a structured review of the 2025 ACT scoping study, supplemented by analysis of industry and analyst literature to reflect how the market is currently defined and how it is evolving. Technologies and services are then grouped into tiers of maturity going from emerging (Tier A) to seervices (Tier D) passing by early commercial, and mature.  

For instance, 6G, FSO and VLEO Satellite Systems, where most of the projected growth lies are classified as Tier A. While photonics and private enterprise networks and satellite communications and cloud platforms are listed under Tier B. 

The scope excludes standard connectivity and networking products. Enabling technologies, such as advanced materials, semiconductors, quantum and cyber security, are not treated as standalone ACT categories. Instead, they are considered as drivers of, or constraints on, ACT adoption, performance and cost where relevant, avoiding overlap and double counting across the wider Industrial Strategy framework. 

Because the two studies define and classify these technologies differently, their figures are not directly comparable. This study estimates Core ACT revenue at £8.4 billion in 2025 (on an aGVA basis), against the £5.9 billion reported for 2024 under the earlier methodology (on a GVA basis); the gap reflects differences in reference year and measure as well as taxonomy. 

Based on 2024 data, UK-registered telecoms companies generated a combined £101.7 billion in reported global revenue and £43.2 billion in Gross Value Added (GVA) in 2024, covering all domestic and international activity reported by the UK entity in its most recent accounts to Companies House. Established telecommunications firms account for the bulk of this, with a £95.8 billion in revenue and £41.6 billion in GVA, while Core ACT firms contributed £5.9 billion in revenue and £1.6 billion in GVA. Mobile network operators account for around 75% (£32 billion) of direct sectoral GVA. 

The study identifies 501 UK-based companies operating fully or partly within the ACT scope, including both UK-domiciled firms and UK-registered firms owned by overseas parents. Together they make up only about 4% of the wider UK telecommunications company base. 

Of these, 320 are Core ACT and 181 are Hybrid ACT.   

The previous ACT market analysis had found 2,774 companies in total, with 344 organisations classified as Core ACT companies. This different assessment has impacted the economic contribution and GVA amounts because they reflect different reference in taxonomy, reducing categories which were included before such as years and measures 

Taken together, ACT revenue is heavily concentrated in service provision rather than in technology development. Fixed Network Operators, which provide broadband services, account for around 45% of total ACT revenue, while ACT Service Providers, the largest segment by company count, take the second-largest share at 22%. This leaves only around 15% of ACT revenue attributable to technology-led segments, within which Fibre Optics/Optical Transport accounts for 6% and Satellite Communication Platforms for 3%. 

This points to ACT service provision being central to the current success of the UK ACT ecosystem. Because service providers and operators account for the large majority of revenue, their investment plans, procurement choices and deployment models have an outsized effect on which technologies gain traction in the UK. 

Both the current study and the earlier ACT market analysis examine how funding flows into the sector, but they draw on different datasets, periods and definitions. Read together they tell a consistent story about where money is going, even where the headline totals are not directly comparable. 

Between 2018 and February 2026, Innovate UK made around 2,227 ACT-aligned participant awards worth approximately £800.2 million across roughly 963 firms, concentrated in connectivity infrastructure and enabling hardware. 

Wider UKRI funding, notably the Federated Telecoms Hubs, points towards satellite-terrestrial and NTN services, photonics, 6G radios and resilient cloud-to-edge architectures. Participation skews to SMEs and scale-ups, while larger firms take the biggest funding share through high-value collaborations. By year, 2023 peaked at about £241.3 million, with 2024 and early 2025 figures still subject to reporting lags. 

The earlier study approached innovation through reported R&D. In 2024, 72 firms reported £1.4 billion of R&D, broadly consistent with ONS figures showing telecoms R&D up 25% between 2022 and 2023. 

In summary, public funding is heavily concentrated in Non-Terrestrial Networks and satellite communications, and ACT firms punch above their weight on grants and R&D intensity. The totals are not directly comparable — £800.2 million on a broad participant basis to 2026 versus £193 million on a narrower company-matched basis to 2024 — but the underlying pattern of strong, space- and infrastructure-focused support holds across both. 

On the other hand, new growth industries depend not only on research strength and technical talent, but on the conditions that let firms form, attract investment and scale. A good signal is that equity funding into UK-headquartered ACT companies totalled just over £300 million across 2022 to 2025, with the number of deals remaining relatively stable.  

On innovation, patent analysis shows VLEO Satellite Systems as the most nascent technology, with little global activity before 2016, while 6G Radio Technologies and VLEO are accelerating fastest and Advanced Fibre SDM shows a higher, more stable level of patenting that points to a more established innovation landscape. Across all Tier A technologies the UK's patent position remains modest; it is strongest in Free Space Optics, led by London-based Archangel Lightworks and its optical-receiver designs for laser communications. 

The analysis points to three areas for further research. First, which emerging ACT areas offer the UK the clearest scale-up potential and whether grant funding aligns with national strengths. Second, how public funding could better support firms from early-stage development through to global scale-up. Lastly, how to deepen the private investment market so that more UK ACT firms can raise larger rounds and grow into globally competitive, UK-headquartered companies. 

The long-term strength of the ACT sector will depend not only on technology and investment, but on whether the UK can develop, attract and retain people with the right skills. ACT-related provision is stronger at postgraduate than undergraduate level, where teaching remains largely anchored in broader Electrical and Electronic Engineering courses. Tier A has the strongest academic footprint, driven mainly by 6G provision, while coverage of Tier B is uneven.  

For example, photonics is relatively well represented, but private enterprise networks and LiFi have none, and satellite provision looks limited given the strategic weight attached to NTN. The practical implication is that strengthening the pipeline may depend as much on embedding more communications and connectivity content in existing engineering degrees as on creating new specialist ACT courses. 

The skills pipeline is geographically distributed, but comparison with where ACT companies cluster suggests a mismatch. London retains 77% of students for work against around 50% in cities such as Manchester, Belfast and Birmingham. Course location therefore signals where skills are developed, not where graduates ultimately work. 

Nevertheless, UK-domiciled undergraduate entry is rising gradually, with 79% of undergraduate entrants being UK residents against just 32% of postgraduates. Postgraduate entry from outside the UK rose between 2020 and 2023 before declining over the following two years, in line with the July 2023 immigration changes, leaving that part of the pipeline exposed to further policy shifts. Strengthening the domestic pipeline also matters for retaining economic activity, since firms unable to recruit engineering talent at home may expand development capacity overseas. 

Women participation in ACT-related subjects has grown by around 10,000 over five years (roughly 8% a year), but the overall gender balance has changed little as male participation has risen in step. Government STEM programmes such as the National Centre for Computing Education operate earlier in the pipeline, so their effects may take years to surface, suggesting broad measures alone may not be enough without more targeted intervention at key transition points.  

Beyond graduates, technical and delivery roles face acute pressure. Around 60% of UK telecoms engineers are over 50 and the sector faces an estimated 30,000-person engineering shortfall over the next decade, gaps that cannot be met through overseas hiring because the work must be done in the UK, making apprenticeships and retraining central to sustaining network build and maintenance. 

The analysis points out that the UK could strengthen and diversify the undergraduate pipeline into ACT careers, including more ACT content in existing engineering courses and employer-backed bursaries. Postgraduate roles plays in UK ACT company formation and innovation, and immigration policy may affect it. Finally, non-university routes such as apprenticeships and retraining could help close technical and delivery workforce gaps.