Trust and talent issues lead telco sector risks, with ineffective transformation a growing concern

• Security and trust remain the top telco risk, driven by AI concerns and escalating cyberthreats

• Talent and culture issues now rank second as telcos double down on digital skills

• Ineffective transformation is a new entry in third, reflecting the importance of technology choices and ongoing performance management

SINGAPORE, 4 MARCH 2025. Underestimating changing imperatives in privacy, security and trust remains as the top risk facing telecommunications companies in 2025. According to the annual EY report, Top 10 Risks in Telecommunications, telcos face substantial challenges to their status as data custodians.

This concern is further reflected in the findings of the complementary EY Decoding the Digital Home Study 2024, which reveals that across the globe, customers are wary about the role artificial intelligence (AI) may play in their service provider interactions, with two-thirds wanting better explanations from connectivity providers about how it is being used. These fears among customers are arising at a time of heightened sensitivity around responsible usage of AI inside organizations.

For telcos, a further consideration around AI is that it is one of several factors adding to their cybersecurity risk burden.

The Top 10 risks included in the 2025 report are:

1. Underestimating changing imperatives in privacy, security and trust
2. Inadequate talent, skills and culture management
3. Ineffective transformation through new technologies
4. Poor management of the sustainability agenda
5. Inability to take advantage of new business models
6. Inadequate network reliability and resilience
7. Ineffective engagement with external ecosystems 
8. Failure to mitigate value chain disruption
9. Inability to adapt to the changing regulatory and policy landscape
10. Inadequate operating models to maximize value creation

Joongshik Wang, EY-Parthenon Asia-Pacific Leader, also EY Asean Telecommunications, Media & Technology Sector Leader, says:

“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.”

Talent, reskilling and collaboration are critical for telcos 

According to the EY Telco of Tomorrow Study, globally, 73% of telco leader respondents rate talent attraction and retention as the most important element of their people strategy. Talent and culture ranks the second top 10 risk, up one place from third last year. Reskilling and better collaboration are also cited as priorities by senior executives globally (50% and 42% respectively). However, redefined employee proposition and purpose – important to support talent attraction – are underscored as people priorities, with only 10% of telco leaders respondents of the same study viewing this as a critical element of their workforce. 

HR functions are under pressure to adapt, as globally, 85% of telco employee respondents believe HR will require major or moderate change over the next five years to meet the talent and strategic needs of the business, according to the EY Work Reimagined Survey. And while telcos surveyed allow fully remote working (41%), most telco employee respondents believe this presents challenges to collaborate with colleagues and use workplace technology.

Wang adds:

“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.”

The effectiveness of transformation programs is under scrutiny

Ineffective transformation through new technologies is a new entry this year, ranking third in the top 10 risks. A variety of emerging technologies will propel transformation in telcos both now and in the future, according to the top 10 risks in telecommunications report. EY research shows that process automation and software-based networks are currently seen as the most important technologies in this regard — but also that AI is set to become the dominant transformation driver in years to come. These sentiments underline the opportunities at hand, but maximizing value from the transition to new technologies brings challenges of its own. 

Telcos face a challenging decision when it comes to selecting performance measures to evaluate the success of their transformation programs. While confidence in AI’s transformative potential is high — 79% of telcos globally believe that it will double efficiency levels in five years’ time — establishing effective key performance indicators (KPIs) is crucial for assessing the progress of technology transformation. This is especially important considering that 75% of telco CEOs respondents believe the burden of legacy IT prevents their organization from innovating at pace.

Value chain disruption is an emerging sector threat

Failure to mitigate value chain disruption is another new entry this year and ranks eighth in the top 10 risks, with threats from outside the sector being a growing area of concern among telcos. While established connectivity providers and mobile virtual network operators (MVNOs) are currently viewed as the leading sources of competitive disruption, 76% of telco leaders respondents believe hyper-scalers will be a source of disruption in five years’ time, while more than one in four point (29%) to satellite operators. While these entities are also important partners, it is clear that senior executives are mindful of risks posed by other entities in the industry value chain.

Wang says:

“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.”

The full report with the top 10 risks can be found here.

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About the report: purpose and methodology 

Top 10 Risks in Telecommunications 2025 is the latest in our ongoing series of reports designed to pinpoint the most critical risks facing the telecommunications sector. Our analysis draws on the EY insights program by leveraging insights from our primary and secondary research, harnessing them with the evolving perspectives of our sector practitioners.