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Ernst & Young: Top 10 Business Risks for Telcos in 2012

F.Y. Teng | Feb. 24, 2012
New business models, capital expenditure and regulations rank among main areas of concern.

Global business and technology consulting firm Ernst & Young has just released its Top 10 risks in telecommunications 2012 report, wherein the authors say that “questions over new business models, levels of capital expenditure and regulatory uncertainty represent the biggest threats and opportunities in a rapidly transforming telecommunications sector.”

The report cites the following as the year’s top business risks–in order of importance–for players in the telecommunications sector.

1)    “Failure to shift the business model from minutes to bytes.”
2)    “Disengagement from the changing customer mindset.”
3)    “Lack of confidence in return on investment.”
4)    “Insufficient information to turn demand into value.”
5)    “Lack of regulatory certainty on new market structures.”
6)    “Failure to capitalise on new types of connectivity.”
7)    “Poorly formulated M&A and partnership strategy.”
8)    “Failure to define new business metrics.”
9)    “Privacy, security and resilience.”
10)    “Lack of organisational flexibility.”

According to the authors of the report–which is the 2012 edition of a regular annual–“for the first time, failure to control costs is no longer in the top ten...while robust defensive positioning reinforced by strong cash flows has helped operators contend with economic uncertainties, new business models are required to unlock growth.”

These new business models appear to be prompted more by customer demand than anything else. Global Telecommunications Leader at Ernst & Young, Jonathan Dharmapalan believes that. “Telecoms operators across the world face changing demands from customers, competitors and regulators, creating new pressures across their organisations,” he said. “Failure to shift their business models to cater to data services is mission-critical for all and is this year’s leading sector risk.”


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