
- Rising adoption of GenAI and customer concerns about data governance contribute to EY’s decision to name security as the number one risk for telcos in the coming year
- ‘Ineffective transformation through new technologies’ is identified as an entirely new risk in the consultancy’s annual top-ten ranking
- Skills and talent shortages, plus shortcomings in culture management, is the second-highest telco risk in EY’s estimation
Global consultancy EY has published its latest annual study on the “top ten risks” facing the telecom sector for 2025, and there is perhaps no surprise that security, or, as EY frames it “underestimating changing imperatives in privacy, security and trust”, is identified as the number one risk.
Cybersecurity has typically occupied a top-three position in EY’s annual rankings of telcos’ top-ten risks in recent years. In 2024, however, fuelled by growing adoption of generative AI (GenAI) and related customer concerns over data governance, EY identified security as the number one telecoms risk, where it menacingly stays for 2025. EY is hardly a lone voice. Moody’s Ratings, at the tail end of 2024, saw fit to move the telecom sector into its highest level of cyber risk.
EY’s evaluation of telecom sector risk is based on a mixture of qualitative input (conversations with C-level execs) combined with its own quantitative research. According to one EY report, which investigated customer attitudes towards their service providers in 10 markets worldwide, it found that two-thirds of those canvassed wanted “better explanations” about the role played by AI in their interaction with telcos.
Those customer fears, pointed out EY, are running in parallel with “heightened sensitivity around responsible usage of AI inside organisations”. And according to another EY survey in 2024, which examined human risk in cybersecurity, some 39% of US employees are not confident that they know how to use AI responsibly.
Add into the mix estimates cited by EY that that 57% of all distributed denial of service (DDOS) attacks across all sectors were targeted at the telecom industry in the first half of 2024, and this seems to be a particularly perilous time for telcos if they don’t have appropriate risk-mitigation measures in place.
“As connectivity takes an increasingly central role in industrial digitalisation, telecommunications companies should take care to identify risks that are emerging outside their organisation, whether these relate to existing supply chains, changing customer needs or more complex policy and regulatory environments,” said Cédric Foray, global telecommunications leader at EY, in prepared remarks. “This is particularly true of cybersecurity, where attack vectors and surfaces are evolving at speed. GenAI’s impact on employee and customer experiences also requires attention to mitigate downside risks, while telcos should stay alert to evolving regulatory imperatives designed to build confidence in AI.”
Various risk perennials appear in EY’s top-ten ranking for 2025: Inadequate network reliability and resilience (number six); inadequate operating models to maximise value creation (10); an inability to adapt to the changing regulatory and policy landscape (nine); and ineffective engagement with external ecosystems (seven).
There is, however, a new risk entrant at number three: “Ineffective transformation through new technologies”. According to EY research, process automation and software-based networks are the most important in this regard (alongside AI, which is “set to become the dominant transformation driver in years to come”). These sentiments underline the opportunities at hand, noted EY, before adding that maximising value from the transition to new technologies brings challenges of its own.
“Telcos should carefully consider how best to phase emerging technology deployments, especially given the complex mix of software and hardware capabilities in scope, and the need to simplify legacy IT and networks,” said Adrian Baschnonga, EY lead analyst for global technology, media & entertainment and telecommunications (TMT). “And telcos also face strategic choices, specifically around AI on issues ranging from use case prioritisation to the selection of open-source or proprietary large language models (LLMs) — as well as vendor and partnership decisions.”
The second-highest risk facing telcos in 2025, says EY, is “inadequate talent, skills and culture management” (up from number three in 2024). To support this ‘promotion’, EY flagged survey findings from its study, Are leaders ready for the telco of tomorrow?, which revealed that senior industry executives’ priorities in terms of people are headed by talent, skills and culture. When asked to rank the inhibitors of transformation in their organisations, they put poor internal collaboration and missing skills second and third respectively, behind lack of budget.
- Ken Wieland, Contributing Editor, TelecomTV
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