According to the EY report, responsible AI practices by telecommunications companies are falling short, while their cybersecurity functions are under-prepared for a rapidly changing threat landscape.
The top risk is companies across the industry underestimating changing imperatives in privacy, security and trust – highlighting just how urgent these challenges are.
EY also said that, as a changing geopolitical environment offers new challenges, telcos could to take advantage of increased desire for digital sovereignty.
“Telcos appear to be lagging behind other sectors in the adoption of measures to improve trust in AI,” explained Cédric Foray, global telecommunications leader at EY. “Customer receptivity to AI is not a given, meaning greater focus on responsible AI frameworks is essential.
“As part of this telco leaders should be engaging regularly with cyber specialists to ensure that their approach is strategically fit for purpose.”
Top 10 risks to telcos: Unpacked
When it comes to adopting specific measures to provide trust in AI systems, EY said telcos are less likely to leverage internal audits, AI ethics policies and third-party attestations, in comparison to other business sectors. In fact, the EY Responsible AI Survey revealed that only 59% of telco respondents state they have a robust methodology for identifying, assessing and mitigating the risks associated with AI, which is against 66% across all sectors.
Another concern cited by EY is that telco cybersecurity functions are struggling to broaden their role and remit while also trying to navigate evolving cybersecurity threats.
Cyberattacks are becoming increasingly more sophisticated, which has led to numerous telco companies experiencing data breaches or service attacks over the summer.
Leading internal challenges cited by industry chief information security officers (CISO) as part of the EY survey, EY include inadequate cybersecurity budgets (55%), difficulties in balancing cybersecurity with the speed of corporate innovation (40%) and a lack of cybersecurity input into cross-function leadership decision-making (36%).
Increasing strategic impact and cybersecurity influence will, according to EY, require greater commitment across telecoms organisations.
Confronting changing technologies
EY said challenges with transformations via new technologies rank highly this year, with several roadblocks impacting their efforts to scale AI plans. According to its Responsible AI Survey, some of the top telco CEO concerns around AI adoption include resource constraints and the difficulty of developing effective governance frameworks (both 55%), ahead of regulatory complexity (53%) and challenges around use case prioritisation (40%).
These uncertainties mean that companies are starting to take very divergent approaches to AI, with 33% planning to accelerate future AI investments on the back of previous positive results. 32%, however, are scaling back or reconsidering future AI investments.
Combined, telcos are facing ongoing pressures to decommission legacy IT systems and older network technologies. These steps are vital if companies want to improve efficiency and agility across their operations.
EY notes that, in the midst of plans to complete legacy network switch-offs, that risk must be managed carefully to maintain reliability of the network and manage customer upgrades.
Upskilling urgencies
Also ranking highly as a critical risk is talent and skills, with EY suggesting that telcos need to acquire new skills on account of advancing automation of network and IT functions.
Adrian Baschnonga, EY global technology, media & entertainment and telecommunications (TMT) lead analyst, said: “The telco skills shortage is becoming more pronounced, particularly as operators look to take advantage of new growth opportunities in areas like AI while ensuring they have the right competencies in place to create new customer value propositions.
“Given the ongoing competition for new talent, reskilling and upskilling initiatives are assuming ever greater importance, while telcos can also collaborate with technology partners in new ways to mitigate talent gaps.”
Industry research indicates that advancing technology is pushing up demand for more specialised skills, with the job roles most in demand being cybersecurity (67%), AI and machine learning (65%), IT infrastructure (63%) and data science (60%). EY notes that many of these roles are difficult to fill, given limited availability of the relevant skills, too many companies recruiting the same people and the telco industry’s inability to pay competitive salaries.
Baschnonga added: “Looking ahead, changes to workforce culture – including greater emphasis on collaboration – are just as important if telcos are to maximise the impact of new skills and capabilities across different corporate functions and lines of business.”
Creating new value amid global tensions
Telco companies are being confronted by a backdrop of geopolitical tensions, which EY said intensifies risk. In the May 2025 edition of the EY CEO Outlook Study, 22% of telco leaders surveyed said geopolitical tensions were a clear threat to growth in 2025, alongside broader macroeconomic uncertainty (18%) and related developments in trade and fiscal policies (13%).
EY suggests that telco CEOs are also sensitive to a variety of global trade disputes. Although telcos haven’t necessarily been directly exposed to the impact of tariffs, that is not the case for some of their suppliers – including device manufacturers and network vendors.
“The challenges created by a changing geopolitical environment are balanced by some opportunities for telcos to generate new value. National technology sovereignty agendas offer telcos a potential upside,” Famke Krumbmüller, EY-Parthenon EMEIA leader, geostrategic business group, said.
Foray added: “To stay resilient and competitive, operators must both anticipate and address emerging risks while continuously monitoring for new threats. It is essential to assess how current risks may shift over time and adapt strategies, accordingly, recognising that the risk landscape is always evolving.”
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