Telecoms face growing risks with AI & talent shortages

Telecommunications companies continue to face significant risks in 2025, particularly concerning privacy, security, and the effects of digital transformation, as detailed in the latest report from EY.

The "Top 10 Risks in Telecommunications" report highlights the challenge telecommunications companies face in maintaining their role as data custodians amidst shifting imperatives related to privacy, security, and trust. The annual EY report underscores the increasing apprehension among customers regarding the use of artificial intelligence (AI) by service providers, with two-thirds of respondents expressing the desire for clearer explanations about AI's role in their interactions with providers.

This finding corresponds with the EY "Decoding the Digital Home Study 2024", which notes customer wariness surrounding AI's responsible usage within organisations. AI is seen as a factor contributing to the cybersecurity risks faced by the telecommunications sector.

The report lists ten risks, with "underestimating changing imperatives in privacy, security, and trust" holding the top position. This is followed by "inadequate talent, skills, and culture management" and "ineffective transformation through new technologies," highlighting the need for careful technology choices and performance management.

Joongshik Wang, EY-Parthenon Asia-Pacific Leader and EY Asean Telecommunications, Media & Technology Sector Leader, commented on the issue, stating, "AI, the Internet of Things (IoT), and 5G are reshaping Asean's telecommunications sector, driving efficiencies and unlocking new business models. At the same time, telcos in Asean must navigate unique regional challenges like digital readiness, regulatory fragmentation, infrastructure gaps and varying levels of cybersecurity maturity. As connectivity expands, so do cyber risks. It is critical for Asean telcos to balance innovation with strong security and compliance. Trusted AI systems will be key to safeguard complex and interconnected AI-driven telecommunications networks and IoT systems, while maintaining consumer and enterprise trust."

The report points out that talent attraction and retention are crucial challenges for the telecommunications industry, occupying the second position in the risk ranking, an ascent from its previous third place. Globally, 73% of telco leaders identify talent management as a priority in their people strategies.

Wang further elaborated, "Talent and skills shortages are major concerns for telcos in Asean, mirroring global trends but amplified by regional challenges such as gaps in emerging technology expertise, talent migration, particularly in emerging economies, and stringent labor policies. Competition from hyperscalers also intensifies talent retention and attraction struggles, making sustainable talent pipelines essential. Beyond upskilling, telcos must foster employee collaboration, as many continue to grapple with organizational silos that hinder innovation and efficiency. As well, they must build strong employer branding to attract top talent."

In the discussion of technology transformation, the report introduces "ineffective transformation through new technologies" as a new risk, ranked third this year. Process automation and software-based networks are identified as essential technologies, with AI expected to be the leading driver of transformation in subsequent years. 79% of telcos globally believe AI will significantly boost efficiency, though effective key performance indicators (KPIs) are necessary for measuring transformation success.

Value chain disruption has also surfaced as a notable threat, with "failure to mitigate value chain disruption" entering the top ten risks at number eight. There is a noted concern among telecommunications leaders that hyperscalers and satellite operators could pose future competitive threats.

Wang remarked, "The telecommunications sector is seeing rapid changes relating to talent, technology and regulation. As telcos push forward with transformation, they must leverage their existing strengths to stay competitive against disruptive competition across the value chain. The business-to-business (B2B) segment remains a key revenue driver and telcos can capture market share from hyperscalers by developing their data center platform capabilities to effectively handle larger AI workloads. We expect a stronger push to modernize IT and connectivity services to fuel B2B growth."