Advanced Television

Report: Top 10 risks to telco sector in 2024

December 20, 2023

Changing imperatives in privacy, security and trust emerges as the top risk facing telecoms companies in 2024. According to the annual EY report, Top 10 risks in telecommunications, cyber-resilience is under pressure, with generative artificial intelligence (GenAI) throwing into question existing data governance strategies.

Over two-thirds (68 per cent) of telco respondents believe they are not doing enough to manage the unintended consequences of artificial intelligence (AI), and 74 per cent say they need to do more to mitigate against ‘bad actors’ who could use AI to support cyber attacks and other malicious activities. At the same time, 53 per cent of telcos believe the cost to their organisation of cyber breaches will exceed $3 million in 2023, up from 40 per cent in 2022.

The influence of AI also sees regulation climb on the 2024 risk radar – from 10th to ninth position. The report highlights that question marks surround the nature of future AI legislation, creating uncertainties for telcos. These pressures are heightened by a divergence in emerging policies between countries regarding the balance between AI guidelines and planned legislation. In the EU specifically, this has triggered concerns that AI could stifle innovation and limit international competitiveness.

Tom Loozen, EY Global Telecommunications Leader, commented: “The evolving telecoms risk radar is indicative of how GenAI is reshaping industries by innovating processes and transforming the way we do business. In this landscape, revisiting data governance frameworks will be critical as businesses look to address emerging risks. This should be accompanied by adopting new approaches to decision-making and leadership interaction that builds consensus on fast-changing issues around cyber-resilience, data ethics, regulation and digital policies.”

The drive to attract and retain talent

Insufficient talent and skills management is a new entrant to the Top 10, debuting in third position. Again, AI is an influencing factor. With new technology cycles in both GenAI and edge computing on the horizon, digital talent is increasingly in demand. In addition, a shortage of network engineers presents a more immediate challenge to the industry.

This trend is compounded by financial pressures, which are threatening the future talent pipeline. More than half (55 per cent) of telecoms employers have introduced hiring freezes – almost double that recorded across all sectors (28 per cent). And 61 per cent of telcos say talent retention is being hampered by salary and benefits cuts as part of a cost-reduction drive – well above the sector average (44 per cent).

Adrian Baschnonga, EY Global TMT Lead Analyst, commented: “Budget constraints are limiting the pursuit of critical skills and talent. Telcos must take steps to strengthen their existing workforce with a deeper focus on learning, upskilling and reskilling. Engaging with employees in new ways is vital, not only to build new software-led capabilities, but to create more successful connections with customers and stakeholders through renewed organisational purpose.”

Consumers want a better deal

Falling just one place to second position on the Top 10 shortlist, telcos’ response to consumers during the cost-of-living crisis remains a pressing risk for 2024. While only 16 per cent of consumers are actively reducing their spend on fixed and mobile connectivity, many are looking for better deals and advice – with 60 per cent agreeing that the cost-of-living crisis has made them more likely to shop around for the best deals. Indeed, the proportion of households going to price comparison sites or friends and family for recommendations has climbed from 19 per cent last year to 30 per cent in 2023.

Loozen says: “Rearticulating the customer promise, along with simplifying value propositions, will help sustain and grow telcos’ relevance to their customers, thereby unlocking new routes to creating long-term value.”

The Top 10 risks included in the 2024 report are:

  1. Underestimating changing imperatives in privacy, security and trust
  2. Insufficient response to customers during the cost-of-living crisis
  3. Inadequate talent and skills management
  4. Poor management of the sustainability agenda
  5. Failure to take advantage of new business models
  6. Inadequate network quality and value proposition
  7. Failure to improve workforce culture and ways of working
  8. Ineffective engagement with external ecosystems
  9. Inability to adapt to the changing regulatory landscape
  10. Failure to maximise value of infrastructure assets

Categories: AI, Articles, Broadband, Markets, Research

Tags: , , , , ,