EY: Telcos Should Focus on Security or Risk Falling Behind

AI has brought on an age of advanced threats and businesses of today are only as strong as their security teams.

EY’s Reimagining Industry Future study 2026 says as much, revealing that security has overtaken price and performance as the single most important quality businesses seek from their telecoms and technology suppliers.

The study shows that enterprises are going full steam ahead with investment in transformative technologies, with AI and analytics raking up the lion’s share of investments, but security and data protection are emerging to be more important than ever. 

“Several considerations feed into businesses’ technology investment plans and decisions, including new policies and laws governing data – such as evolving cybersecurity requirements and emerging national digital sovereignty,” says Rob Atkinson, EY UK&I Technology, Media & Entertainment and Telecommunications Market Leader at IBM. 

“Fundamentally, providers can no longer rely on legacy offerings: they need to adapt their service portfolios and partner eco-systems at speed to stay abreast of fast-changing customer requirements.”

Sovereign cloud for data privacy 

One of the clearest manifestations of this shift is the rise of the sovereign cloud.

17% of organisations are already investing in sovereign cloud solutions and more than half plan to do so.

The main motivations are cybersecurity and tighter control over data, cited by 61%, followed by building customer trust and meeting national regulatory obligations.

“The move to sovereign cloud is forcing businesses to reappraise their supplier relationships. Service providers should carefully consider their go-to-market strategies in sovereign cloud, making sure that they meet their customers’ changing business objectives, while also exploring new ways to differentiate their offerings,” says Adrian Baschnonga, EY Global Technology, Media & Entertainment and Telecommunications (TMT) Lead Analyst.

For many firms, sovereign cloud is not simply a technical upgrade but a strategic safeguard. 

It reflects concerns about where data resides, which laws apply and how insulated operations are from geopolitical shocks.

As a result, vendors are being asked tougher questions about compliance, transparency and long term viability.

Security and AI redefine vendor value

As priorities shift, so too do expectations of suppliers.

Security now ranks as the leading attribute enterprises look for in a provider, underlining the weight placed on protecting customer data and meeting regulatory standards. 

Close behind is the ability to embed AI into service delivery, signalling demand for more intelligent and seamless interactions.

Certain industries, including financial services, automotive and manufacturing, are placing particular emphasis on AI capability when selecting vendors.

Telco operators as infrastructure guardians

Many respondents from the EY study still rate IT and cloud providers more highly than telcos when it comes to delivering tangible business outcomes.

But this does not signify that telco operators are out of the race. A third of the respondents see them primarily as infrastructure guardians, a perception especially strong in healthcare and government. 

Rob says: “The outlook is positive for telcos that can enhance their role as security specialists – given B2B customers’ growing focus on vendor security credentials, and the emergence of new security related services, such as sovereign cloud and fraud management APIs.”

Enterprises are also demanding better service. Many want suppliers to demonstrate how they use technology internally, provide clearer case studies and offer more agile sales engagement. 

Adrian notes: “There is a real business demand for vendors that act as strategic collaborators, not just technology providers. 

“Organisations are also keen to reduce complexity and are demanding more agile sales interactions and simpler product options.

“Service providers that can act as consultative partners, while also delivering smoother customer experiences, will gain positive traction in a crowded market.”

With over 43% planning to consolidate vendors within the next year, those that combine strategic insight with robust security and AI driven services may find themselves in pole position.