In Kenya’s highly competitive telecommunications sector, Airtel Limited faces challenges in sustaining a competitive advantage amidst rapid technological advancements and market dynamics. This study investigates the effect of digital transformation on Airtel Kenya’s competitive advantage, focusing on digital platforms, cloud services, and digital marketing initiatives. Guided by the Innovation Diffusion Theory, Dynamic Capabilities Theory, and Resource-Based View, a correlational research design was employed, targeting 71 key personnel at Airtel Kenya’s Nairobi head office, including managers and technical staff. Data was collected from 62 respondents (87.3% response rate) using semi-structured questionnaires with a five-point Likert scale. Validity was ensured through content and construct alignment, with reliability confirmed by a Cronbach’s alpha of 0.78. Descriptive statistics (means, frequencies, standard deviations) and inferential statistics (correlation, regression) were analyzed using SPSS version 26. Findings revealed a strong positive correlation (r = 0.780, p < 0.001) between digital transformation and competitive advantage, with regression results indicating a significant positive effect (β = 0.489, p < 0.001). Digital platforms enhanced customer engagement (mean = 4.12, SD = 0.89), cloud services improved operational efficiency (mean = 4.05, SD = 0.92), and digital marketing boosted brand visibility (mean = 4.15, SD = 0.87). However, challenges such as high infrastructure costs and data security concerns were noted. The study concludes that digital transformation significantly enhances Airtel’s competitive advantage through improved efficiency, customer retention, and market share. Recommendations include sustained investment in digital infrastructure, enhanced cybersecurity measures, and expanded digital marketing strategies to strengthen market positioning.