Telecoms face rising AI trust, cyber & talent shortage risks

Telecommunications companies are facing a rise in risks tied to artificial intelligence, ineffective digital transformation and shifting global politics. New research has identified key industry vulnerabilities, with privacy, security and trust emerging as the most pressing concerns, particularly as responsible AI usage comes under scrutiny.

AI trust concerns

According to data from an industry survey, only 59% of telecommunications respondents report having robust methodologies for identifying, assessing and mitigating risks associated with artificial intelligence. This figure lags behind the 66% average reported across all sectors. The research also suggests the telecom sector is behind peers in using internal audits, AI ethics policies and third-party attestations to provide trust in their AI systems.

Responsible AI is increasingly being linked not only to regulatory compliance but also to consumer trust. As more network operators embed AI into optimisation and digital services, the need for transparency and accountability is becoming paramount. The gap in AI assurance arrangements is seen as a key risk for customer confidence and future technology adoption.

Cybersecurity pressures

The sector's cybersecurity functions are under heightened pressure amid a more dangerous threat environment. Industry chief information security officers cited insufficient budgets (55%), challenges in balancing cyber controls with the pace of corporate innovation (40%), and lack of input in cross-functional leadership decisions (36%) as their main internal barriers. There is an apparent need for the cybersecurity function to increase its strategic role across telecom organisations to address these challenges.

Transformation challenges

Telecommunications companies continue to struggle with transformation via new technologies, placing this issue as the second biggest risk. AI adoption is affected by resource constraints and difficulties in building effective governance (both 55%), with regulatory complexity (53%) and uncertainty over use case priorities (40%) following closely behind. Companies are consequently split in their AI investment strategies, with 33% preparing to accelerate future investments, while 32% are scaling back or re-evaluating plans.

Ongoing efforts to replace legacy IT and older network technologies, including switching off 2G, 3G and copper networks, bring their own risks. Managing technical transitions remains crucial if operators are to maintain network reliability and ensure customer upgrade paths are smooth.

"In Southeast Asia, consumers now expect more reliable networks, bundled services, flexible financing options and integrated lifestyle offerings. To meet these expectations and stay competitive against cloud-native hyperscalers, telcos must modernize their legacy systems and networks to become more agile. This will enable them to evolve from traditional connectivity providers into builders of platforms, solutions and ecosystems that can power the digital economy," said Joongshik Wang, Asean Technology, Media & Entertainment and Telecommunications Leader, EY.

Talent shortages

Securing and retaining the necessary digital skills has become the third most significant risk. Telecoms firms are under pressure to boost in-house talent in cybersecurity, AI, IT infrastructure and data science. These roles are proving difficult to fill due to limited availability of candidates, competition from other industries for talent, and difficulties in matching the pay levels offered by tech and financial services employers. These constraints risk delaying important technology transformations across the sector.

Geopolitical dynamics

The external risk environment for telcos is increasingly shaped by geopolitical tensions. Nearly a quarter of telecom leaders surveyed globally see global political instability as a growth threat, alongside macroeconomic and trade uncertainties. While operators themselves may have limited direct exposure to the impact of tariffs, many upstream suppliers, such as device makers and network vendors, are affected by higher costs.

A large majority of telecom executives reported confidence in passing potential price increases on to customers, yet the increase in device costs could prompt consumers to delay handset replacement. At the organisational level, geostrategic considerations have become more important, as companies look to adapt supply chains and operations in response to global shifts.

"Macroeconomic uncertainty and geopolitical shifts are now strategic realities, not short-term disruptions. To position themselves strongly in this environment, telcos should look at diversifying supply chains, modernizing infrastructure and staying close to consumer needs," said Wang.