KUALA LUMPUR: The rising cost of living has driven consumers to readjust their spending priorities, and the failure to readjust to the new consumer spending mindset would be the biggest threat facing telecommunication (telco) companies, said EY Research.
According to EY's Top 10 risks in telecommunications 2023 report, an estimated 60 per cent of households are worried about rising broadband subscription prices, and 45 per cent believe they overpay for content services.
"While network reliability remains a consumer pain point, infrastructure resilience and reach have fallen from number one in the ranking for the first time since the onset of the Covid-19 pandemic – now at the fifth position as other challenges become even more pressing," EY said in a statement, today.
EY Global Telecommunications leader Tom Loozen said in today's economic climate, consumers are hyper-focused on the value they are getting from telco providers, and telcos ignore this shift at their peril.
"The threat is compounded by increasing pressure from regulators, with some demanding that telcos do more to offer consumers' social tariffs'.
"In response, telcos must create clear, simple and secure propositions that reassure and appeal to customers," he said.
Meanwhile, Ernst & Young Consulting Sdn Bhd partner Susanna Lim said customers are expected to be more sensitive to pricing due to high inflation rates.
"In Malaysia, the government has introduced a new baseline discounted prepaid data plan that costs RM5 per month, called the 'Unity Package'.
"This package aims to increase the accessibility of the internet while simultaneously lowering the cost of living for individuals in the lower-income group, particularly the bottom-40 (B40) economic group, veterans, persons with disabilities (PwDs) and senior citizens," she said.
On another note, EY Research also revealed that 76 per cent of telcos reported an annual rise in cyber attacks, making cybersecurity the number two risk.
Ernst & Young Consulting Sdn Bhd partner Jason Yuen said cybersecurity attacks were already rising in Malaysia and neighbouring countries, causing telcos to increase their investments towards establishing a cyber-resilient business.
The report also found that poor management of the sustainability agenda is becoming an increasingly urgent threat to the industry, rising from fifth position last year to fourth place on the 2023 ranking.
"The quality of telco operators' climate change disclosures has declined year-on-year, and 39 per cent of respondents do not disclose a specific net-zero strategy, transition plan or decarbonisation strategy despite growing calls for tangible action from all stakeholders," it added.
Lim said looking ahead, these companies must recognise their pivotal role as agents for creating a more sustainable society and take appropriate action.
Source: https://www.nst.com.my/business/2023/04/896469/changing-consumers-spending-mindset-biggest-threat-telcos-ey-report