Top risks facing telecommunication companies in 2024 revolve around changing imperatives in privacy, security, and trust, according to the annual EY report, Top 10 risks in telecommunications.
It revealed that cyber space is under constant threat, with generative artificial intelligence (GenAI) questioning existing data governance strategies.
A significant 68% of telecommunication respondents believe they are not adequately managing the unintended consequences of AI, and 74% feel the need to up their defence against potential bad actors who could exploit AI for cyber attacks and other harmful activities.
Alarmingly, over half (53%) believe that cyber breaches could cost their organisation than US$3m in 2023, a sharp rise from 40% in 2022.
The EY report highlighted that the influence of AI is paving the way for a change in regulations too, climbing to ninth place on the 2024 risk radar from 10th last year. The report drew attention to the uncertainty surrounding the nature of future AI legislation and the implications for telecommunication companies.
These uncertainties are exacerbated by divergent emerging policies in various countries regarding AI regulations and expected legislation.
Tom Loozen, EY Global Telecommunications Leader, asserted, "The evolving telecoms risk radar reflects the transformative impact of GenAI on industry processes and business methods. In such a landscape, revision of data governance frameworks is key to addressing emerging risks."
"Such initiatives should be complemented with new decision-making approaches and leadership interactions that foster consensus on rapidly changing matters around cyber-resilience, data ethics, regulations, and digital policies."
A shortage of skills and talent, a new addition to the EY Top 10, assumes the third position. Again, AI plays a crucial role, driving a demand for digital talent as technology cycles reinvent GenAI and edge computing.
Financial pressures are exacerbating the skill gap as more than half (55%) of telecoms companies have imposed hiring freezes- nearly twice the across-sector level (28%). Alarmingly, 61% indicate that reductions in salaries and benefits are impacting talent retention, dramatically above the sector average (44%).
Adrian Baschnonga, EY Global TMT Lead Analyst commented, "Budget restrictions are obstructing the development of vital skills and talent. To strengthen their existing workforce, telecoms must invest in learning, upskilling and reskilling."
"They must engage with their employees in innovative ways, not only to develop new software-led capabilities but also to foster successful relationships with customers and stakeholders through renewed organisational purpose."
Pressing concerns for telecom service providers in 2024 also include responding effectively to the cost-of-living crisis. A significant 60% of the populace, driven by the crisis, are actively seeking and shopping around for better deals. The proportion of households referring to price comparison sites or seeking advice from friends and family has surged from 19% last year to 30% in 2023.
Tom Loozen also highlighted that "Rearticulating the customer promise, along with simplifying value propositions, will help telcos sustain and grow their relevance to customers, thereby unlocking new routes to creating long-term value."
The Top 10 risks identified in the EY 2024 report also included inadequate management of sustainability challenges, failure to maximise value of infrastructure assets, effective engagement with external ecosystems, and poor response to customers during the cost-of-living crisis.