Brexit implications for UK/EU mobile telecoms: choppy waters ahead

Analyst: Declan Lonergan

In a recent report, we assessed the implications of Brexit for the technology sector. This included potential effects on skills and people, research programs, datacenter location, privacy laws, siting of businesses, tariffs and taxes, grants, currencies, infrastructure and other areas. In this report, we focus on the mobile telecom sector specifically, to assess how Brexit will affect UK and EU markets and their participants. On balance, we believe uncertainty and its destabilizing effects – both at the macroeconomic level and for the telecom industry specifically – will outweigh any potential benefits that could arise, for example, in relation to greater regulatory sovereignty for the UK.

The 451 Take

The short-term uncertainty caused by Brexit will eventually give way to a different long-term operating reality. The competitive landscape for telcos will not be affected directly, at least not in the short term. None of the existing players is likely to re-evaluate its commitment to the market as an immediate response to the Brexit result. Similarly, the impact in areas like industry regulation and even mobile roaming charges are unlikely to materially change, even if the UK is excluded from the single market. There may even be some upside for the UK players, with the potential for telecom regulatory policies to be adapted more effectively to the specific needs of the UK market. But that's where the good news ends and uncertainty begins. Following the referendum result – and depending on the exact nature of the UK-EU separation – there are potential negative effects in relation to macroeconomic weakness, reduced demand for telecom services, constrained network investments, and more restrictive employment options. Eventually – as it always does – a new normal will emerge, but for the next two to three years at least, the UK telecom market is heading for choppy waters.

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