Telcos need to manage connectivity commoditization and lack of trust among other risks
TORONTO, June 4, 2019 /CNW/ - How the Canadian telecommunications sector manages new risks – like connectivity commoditization, the erosion of organizational trust and scaling internal digital initiatives – will help balance the short and long-term needs of the business as it faces the inevitable pressure to change, according to a new EY report.
Top risks in telecommunications 2019 Canada outlines how new customer demands, digital tools and cost pressures are leaving telcos no option but to reinvent their services, business models and operations to improve revenue streams and cost base.
"Although sector revenues in Canada are forecasted to grow faster than global revenues, telcos can't continue with business-as-usual," says Rohit Puri, EY Canada Telecommunications Leader. "Understanding and mitigating new risks that arise as telcos evolve into adaptive digital enterprises will be critical to getting ahead of a growing set of competitors."
This list — compiled by EY leaders — highlights the top risks for Canadian operators:
- Connectivity commoditization due to ineffective growth and diversification strategy.
- Eroding organizational trust from underestimating privacy and security changes.
- Scaling internal digital initiatives amid legacy IT system and skills barriers.
- Inadequate organizational agility exacerbated by a lack of skilled talent.
- Inability to combat growing capex burden while still seeking ROI from infrastructure.
Research shows that while 51% of operators believe that the lack of digital skills is a top transformation barrier, only 3% see growing and retaining talent as a top strategic priority — highlighting the need to focus on internal workforce issues.
On the capex front, the rollout of 5G is expected to see capital intensity increase to 21% by 2023 globally – just one of the factors impacting infrastructure ROI.
"Putting the consumer at the forefront for better, faster services with more privacy and security by design means investing in new technologies and changing the business culture," says Puri. "But integrating new digital tools with outdated legacy systems must be done in a cost-efficient way — a far from an easy problem to solve. The first step for Canadian telcos is to be clear on their top risks and how they plan to manage them for sustainable business success."
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SOURCE EY (Ernst & Young)