As the telecommunications industry navigates a rapidly evolving landscape, a recent EY report highlights several pressing risks that threaten the sector's stability and growth. The report identifies three key areas of concern for 2025: security and trust issues, talent and culture challenges, and ineffective transformation.
The foremost risk remains the underestimation of privacy, security, and trust imperatives. As telecommunications companies (telcos) increasingly serve as data custodians, customer apprehensions surrounding artificial intelligence (AI) usage are intensifying.
A related study indicates that two-thirds of customers desire clearer explanations from their service providers regarding AI applications. This anxiety is compounded by escalating cyber threats, making robust security measures essential for maintaining consumer confidence.
But while technologies like AI, the Internet of Things (IoT), and 5G offer transformative potential, they also introduce new vulnerabilities.
"As connectivity expands, so do the risks associated with cyberattacks and data breaches. For telcos in the ASEAN region, the challenge is particularly acute, requiring a balance between innovation and stringent security compliance. Trusted AI systems will play a crucial role in safeguarding these complex networks," said EY-Parthenon Asia-Pacific Leader, Joongshik Wang.
The second significant risk pertains to talent management. According to the EY Telco of Tomorrow Study, 73% of telco leaders cite talent attraction and retention as their top priority. This concern is exacerbated by a regional talent shortage, particularly in emerging technologies. While 50% of executives prioritise reskilling, only 10% view an employee-centric approach as critical for workforce strategy. The pressure on HR functions is mounting, with 85% of telco employees believing that significant changes will be necessary in the next five years to align HR practices with business needs.
Wang notes that the competition for skilled employees is particularly fierce in the ASEAN region, with talent migration and stringent labour policies further complicating the landscape. To overcome these challenges, telcos must cultivate strong employer branding and foster collaboration to break down organisational silos that hinder innovation.
A new entrant to the report’s top risks is ineffective transformation through new technologies, now ranking third. While emerging technologies such as process automation and software-based networks are expected to drive significant change, the challenge lies in effectively implementing and measuring these transformations. Although 79% of telcos believe AI will double efficiency levels within five years, establishing relevant key performance indicators (KPIs) remains crucial for assessing progress.
Additionally, telcos face the risk of value chain disruption, ranked eighth among the top risks. As established and emerging players, including hyperscalers and satellite operators, threaten traditional business models, telcos must remain vigilant. The report reveals that 76% of telco leaders anticipate hyper-scalers will pose a significant competitive challenge in the coming years.
As the telecommunications sector grapples with these multifaceted risks, it must leverage its inherent strengths to navigate the complexities of transformation. Focusing on the business-to-business (B2B) segment could provide a pathway for growth, particularly through enhanced data centre capabilities to handle the demands of larger AI workloads.
The telecommunications industry stands at a crossroads, where effective management of security, talent, and technology will determine its future viability. The ability to adapt to these challenges while maintaining trust and efficiency will be crucial for telcos aiming to thrive in an increasingly competitive environment.