Telecommunications leaders prioritise geopolitics as growth threats widen

Privacy, security, and trust remain the sector’s top-ranked risk. 

Telecommunications leaders are placing geopolitical risk front and centre in 2026, with 22% of global telco CEOs citing it as the top threat to growth, surpassing concerns over macroeconomic conditions and trade policy, according to EY’s latest report.

The rising tension is reshaping corporate strategies. More than one-third of operators (37%) are now taking active geostrategic measures, such as localising supply chains or diversifying operations, up from just 24% in 2021.

Whilst 82% of telco executives believe higher device costs can be passed on to customers, EY cautioned that longer device replacement cycles may weigh on demand in the near term.

In Southeast Asia, EY saw geopolitical adaptation as part of a wider pivot from pure connectivity to platform and ecosystem-based models. This shift will require telcos to modernise legacy infrastructure and improve resilience at both the operational and customer-facing levels.

Privacy, security, and trust remain the sector’s top-ranked risk. The report found telecom operators lag behind other industries in adopting responsible AI frameworks, with only 59% reporting a robust AI risk methodology, compared to 66% across all sectors. Budget constraints, innovation-security tensions, and lack of board-level input are key issues.

Despite broad interest in AI, investment strategies remain mixed. Whilst 33% plan to accelerate AI initiatives, another 32% are scaling back or reassessing due to resource constraints, governance complexity, and regulatory concerns.

The pressure to upgrade legacy networks, especially with 2G/3G and copper phaseouts, remains intense. Telcos must manage these transitions carefully to avoid service disruptions and retain customers.

Talent shortages also continue to bite. Demand for cybersecurity, AI/ML, infrastructure and data science roles far exceeds supply. Hiring is further complicated by fierce salary competition.

EY’s regional commentary highlighted that stronger cyber governance, more transparent AI use, and leadership on digital ethics could help telcos across Asia future-proof their operations.

The report’s top 10 risk list also includes ineffective tech transformation, cultural and skills mismatches, network performance, new business models, sustainability, and operating model value creation.