Top 10 Risks in Telecommunications

Sponsored by EY

I have just read a report by EY published on November 30 entitled The Top 10 Risks in Telecommunications. You can find it here:

I would like to share with you my thoughts on the report and what it means for the telecommunication sector as a whole.

I am involved with many digital transformation projects across several industries. Digital transformation is not only about the use of digital technologies but also about change management and how technology can augment humans. Technology needs to be at the service of users and ensure it relieves the mundane aspect of any job. At the beginning of a digital transformation project, I always do an audit of the current work situation. I then interview staff and management. What regularly comes out of this audit is that many recurrent tasks slow down employees’ productivity, interest and focus. Sometimes, I am given access to clients and realize that their priorities are always evolving. What used to be a priority two or three years ago has changed. This change is also true with investors, journalists and suppliers. Additionally, what is fascinating is the cascade element of all projects. When you start with internal priorities and your vison has been implemented, naturally external risks and priorities will become clearer and easier to put in place.

As soon as you start a digital transformation project, you realize that overall communication issues are the key to success. Moreover, the telecoms sector is at the heart of the digital disruption and convergence agenda. Ultimately, our world has become mobile and any technology that supports the wireless shift is the basis for delivering tomorrow’s business solutions now. As a telecommunication company, you will be faced with many strategic decisions that need action as soon as possible. For example, in terms of infrastructure, you will need to ensure resilience and reach within a reasonable budget and efficiently. Also, as part of this strategy you will need to ensure that your customers, shareholders and suppliers trust you and remain loyal to your brand (especially as worker churn continues to rise). And you will need to optimize your return on investment while at the same time ensuring scalability for any digitization project.

As I mentioned above, what is very clear in The Top 10 Risks in Telecommunications report from EY, is that customer focus has changed. In today’s challenging world, customers face high inflation and longer delays in receiving their goods due to ongoing global supply chain disruption. Telecommunication companies face higher energy prices and longer delays to receiving supplies. And all of these forces are exacerbated by continued geopolitical instability. I found it particularly interesting to see that every region of the world faces different challenges, according to the report. For example, in North America, cable companies account for one in three mobile contract additions. Among fixed telcos, there is an increasing focus on core connectivity and reduced appetite for content or platform assets. In Europe, telcos have outperformed the wider market with high competition in Southern Europe, and the region is seeing a lot of market consolidation with buoyant M&A in areas like infrastructure carve-out and tower deals. Latin America appears to be more insulated from geopolitical risks, while 5G for enterprise remains a key focus. And in Asia Pacific you will find different focuses based on sub-region priorities.

EY focuses on the 10 industry risks that the telecommunication sector faces based on financial, compliance, strategic and operational risks. The most urgent risk identified is around failing to respond to customers during the emerging cost-of-living crisis. In every sector today, including telecommunications, customers are very focused on the value they are getting out of their connectivity providers. Their experience needs to be optimized and loyalty strategies need to be implemented. Offers must be simpler, more transparent and secure. Other risks shortlisted include keeping pace with cyber risk (second position); improving workforce culture and ways of working (third place), – specifically in relation to diverging perceptions between employers and employees about hybrid working; poor management of the sustainability agenda (fourth in the ranking); and the inability to accelerate efficiencies through digitization (at fifth place).

The common thread between all of the risks shortlisted is meeting changing customer and employee demands. Digital transformation is all about optimizing customer experience through the use of technology. To ensure success in enterprise projects, organizations need to implement agile business transformation processes and ensure that their capex allocation and operations are optimized. They also need to deliver effectively and efficiently their business support system, operational support system and IT transformation projects. All tools available such as intelligent automation (using artificial intelligence and machine learning algorithms) and internet of things (IoT) platforms, as well as data and analytics, will require professional implementation that adapt to the needs of employees, clients, shareholders and suppliers.

Reports such as The Top 10 Risks in Telecommunications from EY are a great tool to help support a transformation strategy and build resilience through change. This risk radar is a visual North Star that can help leaders do just that, and navigate the course of today’s disruptive forces. All companies need to optimize an ecosystem experience where anyone dealing with the company feels valued. Communication needs to be personalized, offers need to be clear, appealing and secure.

Fundamentally, telcos remain under pressure in the current high-inflation environment and now is the time to map-out your company’s’ risk exposure – and act accordingly.