17.12.2019

Telecommunication facilitated people’s lifestyles ever since it was developed. Imagining a world without it is merely impossible now. Every year, the telecommunication industry expands, however, within this expansion comes great risks and consequences. As a result, the telecommunication industry must always adapt to rapidly changing market demands and the accelerating pace of technological innovation in order to adjust and continue it’s expansion successfully. 

Top Risks of Telecommunication Industry 

Earnest and Young conducted an analysis of the telecoms risk universe for 2019. They have combined insights from industry and consumer surveys with the evolving perspectives of sector practitioners to pinpoint the most critical risks facing the telecommunications today. The found out that unless the telcos put customers at the front and center of their strategies, they’ll struggle to succeed.

Here are the 10 biggest risks they’ve identified across the sector.

Ineffective digital growth and diversification strategy

Industry surveys confirm that digital services are the top priority for telco leaders. As 5G and the IoT move to center stage, telcos need to maximize their addressable market by developing innovative business models, and seizing opportunities for inorganic growth, service innovation and diversification through M&A and strategic alliances. 

Underestimating changing imperatives in privacy, security, and trust

Consumers’ concerns about the use of their online data are continuing to increase. Consumers and enterprises having digital trust now, telcos face the growing challenge of ensuring that their customers’ data and experiences are safe and secure. 

Inability to scale internal digitization initiatives

In their push to transform the customer experience, generate new efficiencies and boost organizational agility, many operators are launching multiyear digital transformation programs. Yet EY research shows these projects face significant barriers — not least are the burden of legacy IT platforms and a lack of digital skills. 

Failure to prioritize workforce planning and design

The shortage of digital skills presents challenges in the telecom industry.  Digital transformation programs tend to focus more on overhauling systems and processes than reshaping workforce capability. According to EY, to overcome these issues, telcos must take a holistic approach to workforce design. Building employee engagement is especially vital since this provides the foundation for a superior customer experience.

Inability to combat the growing CAPEX burden

Operators across the world are facing a new wave of network investment, ranging from 5G and low-power wide area networks to gigabit fiber. As operators grapple with an ever more diverse portfolio of network assets, making the right choices around infrastructure switch-off, spin-off and sharing will become increasingly vital.

Failure to navigate evolving disruption scenarios

Rising demand for intelligent connectivity is providing a wide range of powerful disruptors to the telecom industry. As the move to 5G gains momentum, operators need to stay alert to potentially disruptive threats and ensure that tackling them remains a top-of-mind priority. 

Inadequate portfolio management processes

Industry studies suggest that half of all operators fail to achieve the synergies initially targeted from their M&A deals, with inadequate integration planning and management processes often to blame. As convergence sees the differences between buyers and sellers widen, more transformational M&A may increase the challenges of integration, demanding more flexible integration road maps and smarter management of telcos’ business portfolios. 

Failure to adapt to changing regulatory frameworks

As regulators’ focus continues to shift toward areas such as data protection, wholesale pricing and interconnection are easing. Telecoms is increasingly finding itself at the heart of governments’ industrial policies, creating new demands on operators. According to EY, it’s important for them to map out, balance and navigate this changing landscape of national and international regulation and policy. 

Insufficient engagement with industry verticals and public sector

telecoms is increasingly viewed as an enabler of digital transformation among private sector enterprises across many vertical industries. These factors point to a need for telcos to engage proactively with both the public sector and different industries — but to date, the level of engagement has remained limited. Telcos will position themselves to lead the emergence of new ecosystems and play their full role in transforming industries and society. 

Failure to integrate multiple routes to innovation

In recent decades, operators have outsourced much of their R&D. And operators’ R&D as a proportion is small relative to other industries, underlining how much innovation leadership is now in the hands of other players in the value chain. More recently, operators have taken steps to widen their sources of innovation, by launching new venture capital funds and incubator initiatives. 

Wardon Systems, Pinngle Team

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