The impact of a no-deal Brexit on the Telecoms industry

21.01.2019

BT could be at risk of losing many key EU contracts following the Brexit if a deal isn’t signed off. Leaked documents from a European Parliament meeting have revealed that UK company contracts are at risk if we leave the EU. 

The meeting was held by key members of the European Parliament and a working-group of MEPs who were planning for the event of a no deal Brexit. In the meeting they discussed the future of BT’s contracts with the EU, noting that “sensitive contracts” are likely to be terminated early for security reasons. Contracts that are not said to be sensitive will run their course. 

Further to that, they discussed the future of procurement rules, ensuring that British companies should not be contracted or invited to tender for projects within the European Parliament.

BT sent a letter to its employees prior to the referendum asking them to vote carefully and expressing their concern that a leave vote would have detrimental consequences for their business. 

You can read the full story here.

But where does this leave the telecoms industry if a deal isn’t reached by 29th March 2019?

The vote by MPs against Theresa May’s deal last night has left the country in even more uncertainty than before. With many potential outcomes; a general election, leaving the EU with no deal, a fight for a better deal and a call for a second referendum. 

The government did prepare a document which stated how to prepare for a no deal Brexit, but it doesn’t offer much advice. Largely, it states that UK businesses will operate generally unphased in the interim between the vote against Theresa May’s deal on 15th January and the date set to leave, 29th March 2019. 

The report states…

In a no deal scenario, UK operators would continue to be able to provide cross-border telecoms services as well as operate within the EU, under the World Trade Organisation’s GATS (General Agreement on Trade in Services).”

You can read the report here.

Things to consider:

  • Mobile roaming charges– there’s a chance that vendors could monetise the no deal scenario to hike up prices again. Although many big vendors including Vodafone and O2 have stated they would not reinstate charges following a no deal Brexit. Dominic Raab has stated that charges would not be able to exceed £45 per billing month.
  • Hardware imports– the majority of the UK telecoms hardware is imported and largely from companies outside of the EU such as China and America. It’s likely that if the value of the pound depreciates further, the hardware will cost more. However, leaving the EU could open up new opportunities to negotiate better trade agreements with these countries and therefore lower charges. 
  • Competition commissioning– following Brexit, the EU will no longer be able to make decisions on mergers that include UK businesses, making acquisitions and mergers much smoother under UK law.

We’d love to hear your thoughts on how the telecoms industry will be affected after we leave the EU in March 2019. Email us and we will feature your comments here.