How can telcos navigate a world of evolving risks?

Risk 3: Inadequate talent, skills and culture management

The skills shortfall is difficult to solve, while organizational culture often remains resistant to change.

Telcos’ need for new skills is being driven by developments ranging from the advancing automation of network and IT functions to in-house platform development and the integration of multi-vendor tech solutions.

Third-party research¹ shows such factors are driving up demand for specific skills in areas like cybersecurity, AI and machine learning (ML), IT infrastructure and data science. Crucially, many of these roles are especially difficult to fill — causing telcos to focus on approaches like upskilling, temporary recruitment from tech partners, and buying in skills through company acquisitions.

However, even when telcos have succeeded in putting the right skills in place, they’re finding that changing ingrained workforce cultures and adapting to new working methodologies is far from straightforward.

Risk 5: Insufficient adaptation to the evolving geopolitical environment

A backdrop of geopolitical tensions adds to the external uncertainties facing telcos — but national technology sovereignty strategies also signal upside.

In the  latest EY CEO Outlook Study, 22% of telco leaders cite geopolitical tensions as a threat to growth, alongside trade and fiscal policies (13%) and broader macroeconomic uncertainty (18%). While telcos’ direct exposure to tariffs is limited, the same is not true of their upstream device and network suppliers — raising the risk that higher device costs may further lengthen consumers’ handset replacement cycles.

That said, the challenges created by geopolitical tensions are balanced by some opportunities to unlock new forms of value. For example, national technology sovereignty agendas may let telcos adopt a more explicit role as infrastructure champions and data guardians. Meanwhile, the spate of new cyber regulations and AI policies further reinforces the need for robust data protection measures and responsible AI management.

Risk 6: Inability to take advantage of new business models

Enterprise customers lack understanding of new business models, while realizing emerging service opportunities requires telcos to make some hard choices.

While telcos are making good progress with rolling out new service offerings for enterprises, these customers’ low awareness of new B2B propositions is limiting adoption. The EY Reimagining Industry Futures Study finds that 24% of enterprises across sectors have low or no awareness of network application programming interface (API) solutions, a knowledge gap that widens to 30% in manufacturing.
 

A silver lining may be offered by governments’ policy shifts, which — as we mentioned earlier — are opening new service possibilities for telcos in areas like sovereign cloud and AI infrastructure. But seizing these opportunities will demand the right optionality and ecosystem approaches: for example, sovereign cloud solutions can be offered either directly, via bilateral partnerships, or via dedicated joint ventures.

Risk 8: Failure to respond effectively to changing customer needs

Consumer concern over digital safety is increasing, while younger people often lack confidence when engaging with connectivity offerings.

Consumers are increasingly anxious about online safety: in the EY Decoding the Digital Home study, the proportion of consumers saying they’re “very concerned” about harmful online content has risen from 38% in 2022 to 47% in 2024. A substantial proportion (40%) are also worried by excessive screen time.
 

While governments are aware of these fears and implementing policy actions in response, telecoms operators offering services to families and teenagers face a need to navigate a complex stakeholder landscape. A further complicating factor is that younger customers appear to experience greater challenges with telecoms services than their older peers. Decoding the Digital Home also finds that 25- to 34-year-olds rank highest among all demographic groups for finding connectivity packages difficult to understand.

Risk 9: Poor management of the sustainability agenda

While telcos are making progress on reducing their impacts, retaining focus on sustainability improvements will be critical.

According to GSMA benchmarking,⁴ telcos are improving their performance over time against key environmental, social and governance (ESG) metrics, with 75% of GSMA’s 24 participating operators reporting lower Scope 1 and 2 emissions compared with previous reporting periods. Nearly all also indicate they have implemented a sustainable procurement policy.
 

However, sustained commitment to future timelines for improving ESG performance is uncertain: the EY CEO Outlook Survey finds that 60% of telco leaders are rethinking the timescales for their sustainability promises. Meanwhile, the EY Telco of Tomorrow study shows that operators are planning a wide range of ESG-related actions over the coming five years: balancing a number of competing ESG priorities going forward will be essential.

Risk 10: Inadequate operating models to maximize value creation

As telcos continue to centralize their business operations and engage in M&A, industry operating models are being stretched in new directions.

Enterprises’ transition toward a global business services (GBS) model is ongoing, with industry research⁵ showing that 61% of enterprises are committed to GBS — albeit at varying stages of maturity in terms of implementation. While improving cost-efficiency remains an important goal, GBS is also delivering other benefits ranging from digitization and workforce optimization to enabling new services.
 

Meanwhile, telcos’ rising appetite for M&A is a further catalyst for operating model refinements: the EY CEO Outlook Survey finds that 77% of telco leaders are confident they can leverage M&A to drive growth and scale. However, telcos need to be aware of the inherent risks that more ambitious deal-making can bring in areas like skills, culture, technology and stakeholder management.

Next steps for telecommunications operators to mitigate risks in a fast-changing landscape

As operators consider how best to mitigate the leading risks that we’ve highlighted, they should continue to scan the horizon for new threats, while also evaluating the evolving impact of existing risks and looking to convert apparent challenges into opportunities. Across these actions, it’s key to understand how the concept of risk itself is evolving, as it is reshaped by four defining characteristics — with today’s risks becoming increasingly nonlinear, accelerated, volatile and interconnected (NAVI). Thriving in a NAVI world demands new approaches to strategy and risk management, together with an ability to align the two. Against this background, we recommend telcos take three actions.