Navigating the Top Risks in Telecommunications for 2025
As the telecommunications landscape evolves, companies are facing an array of challenges that threaten their operations, reputation, and financial performance. According to the recently released EY report on the top 10 risks in telecommunications for 2025, three major risks have emerged as critical focal points for telcos. Understanding these risks—security and trust, talent and culture, and ineffective transformation—can help leaders steer their organizations through the complexities of a digitally driven world.
Security and Trust: The Preeminent Risk
Security and trust have emerged as the top risks for telecommunications companies, primarily fueled by growing concerns related to artificial intelligence (AI) and escalating cyberthreats. In an age where data is the new currency, customers are increasingly worried about how their personal information is handled. The EY research highlights that two-thirds of customers desire clearer explanations from their service providers about how AI influences their interactions.
This unease coincides with increasing cybersecurity threats. In the first half of 2024 alone, the telecommunications sector was targeted by 57% of distributed denial of service (DDoS) attacks across all industries. Cédric Foray, EY Global Telecommunications Leader, underscores that as connectivity becomes essential to industrial digitalization, telcos must be vigilant about risks extending beyond their immediate operations, especially in cybersecurity, where evolving attack vectors pose substantial new challenges.
Talent and Culture: The Second Major Risk
Following closely behind security and trust, the issue of talent and culture has risen in prominence, now ranking as the second largest risk for telcos. A substantial 73% of respondents from the EY Telco of Tomorrow study indicate that attracting and retaining skilled talent is crucial for their organizational success.
Reskilling initiatives are increasingly viewed as essential, with 50% of senior executives acknowledging the need for better training and development programs. Just as importantly, organizations must rethink their employee propositions to attract and retain talent. A staggering 85% of telco employees feel that HR functions must evolve significantly over the next five years to meet strategic business needs. The challenge is further compounded by the trend towards remote work, with many employees expressing concerns about collaboration and engagement with their colleagues in a virtual environment.
Ineffective Transformation: A Rising Concern
Ineffective transformation through new technologies is another pressing area of concern, newly marked as the third significant risk in the EY report. Telecommunications firms are exploring a myriad of emerging technologies—including AI, process automation, and software-based networks—to drive their digital transformations. However, the successful integration of these technologies is fraught with challenges.
Adrian Baschnonga, EY Global TMT Lead Analyst, emphasizes the importance of strategically phasing the deployment of these technologies. Companies face a complex mix of software and hardware, which necessitates a simplification of legacy systems to fully leverage the advantages of new solutions. While the potential for AI to double operational efficiency exists—79% of telcos believe it will do so in the next five years—establishing effective key performance indicators (KPIs) to assess this transformation remains a critical concern.
The Emerging Threat of Value Chain Disruption
Another noteworthy risk is the threat of value chain disruption, which has emerged as the eighth risk in the report. Telecommunications companies must contend with competitive pressures from outside their sector, including hyper-scalers and satellite operators. While these entities can also be seen as partners in some contexts, they are increasingly recognized as sources of potential disruption.
As Foray observes, telcos need to continuously assess the landscape for new threats, understanding the interconnectedness of various risks. Mitigating one challenge may enhance the response to another, emphasizing the need for a holistic perspective when managing risks.
The Broader Risks Landscape
The EY report outlines a comprehensive list of the top 10 risks facing telecommunications in 2025, illustrating the multifaceted challenges that these companies must navigate:
- Underestimating changing imperatives in privacy, security, and trust
- Inadequate talent, skills, and culture management
- Ineffective transformation through new technologies
- Poor management of the sustainability agenda
- Inability to take advantage of new business models
- Inadequate network reliability and resilience
- Ineffective engagement with external ecosystems
- Failure to mitigate value chain disruption
- Inability to adapt to the changing regulatory and policy landscape
- Inadequate operating models to maximize value creation
Each of these risks signifies the importance of adopting proactive strategies that keep pace with the rapidly changing telecommunications landscape.
About the EY Report
The “Top 10 Risks in Telecommunications 2025” report serves as a critical resource for understanding the most pressing risks in the industry. This analysis draws upon a mix of primary and secondary research, providing insights that can guide telecommunications executives in their strategic planning. As organizations face the dual pressures of operational demands and rising customer expectations, being informed is essential for success in this dynamic environment.
This structured understanding of risks allows telecommunications leaders to formulate robust strategies that not only protect their businesses but also position them for future growth.