This text formed the first part of Inside TMN’s newsletter sent on Friday, June 24. It also includes an updated statement from Orange on the implications of Brexit.
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Brexit and the mobile network sector
It’s happened. So what is the way forward from here? There are still some holding on to a lingering hope that perhaps, somehow, Brexit isn’t going to happen. Maybe the new Conservative Prime Minister will feel he/she has to call a new General Election to validate their negotiation terms. Maybe at that point there will be a reaction against Leave politicians as their lies and broken promises are exposed. But really? We are out.
We have cut down a European project that brought us prosperity and peace. And for some Brexit was about doing exactly that. Giving one of several victorious speeches this morning, UKIP’s Nigel Farage was quick to predict the likely exits of a clutch of other nations. He and his type do not just want a Brexit, they want to end “The Project” of the EU and end the Euro while they are at it.
The EU leadership knows that and it will move as best it can to forestall that. That does not seem likely to include making things as sweet as possible for the UK. The message must be that if you leave you leave – you cannot have your cake/gateau/rye bread/focaccia etc and eat it.
EC Digital Agenda Commissioner Gunther Oettinger has already tweeted “out is out” The EU has produced a joint statement that makes it clear that it will play hardball in negotiations and that any exit should happen as quickly as possible.
So Britain leaves, and Europe’s politicians will try to circle the wagons to fend off other raiders who are emboldened by the success of a UK movement that achieved its success by doing two things. First, it convinced voters in depressed economic areas that their troubles were down to a combination of EU-backed freedom of movement and of widespread political indifference to their plight. It was a counter-punch from an electorate that feels abandoned and doesn’t care that it may even be hurting itself. Many voted Leave just because they could. If you are in a European country with these sorts of social issues, then by all means ask your politicians to address them!
The second success of the Leave campaign was its appeal to a much wider range of socio-economic voters on sovereignty, cultural and identity grounds. Who are you, the referendum asked? Who are you really? Some of this prompted a purely xenophobic response. But there was also the Leave voter who recognised that there is much good in the EU, but that it needed reform that was never going to happen, so we should leave and “gain control” and “sovereignty”. Here the biggest failure of the EU was its prior inability to face up to the need for reform, to give UK Prime Minister David Cameron something to campaign with, and to underestimate how much trouble the Remain campaign would face. Can it learn from that?
And so, as this is usually a newsletter focussed on mobile network technology, we must therefore consider the implications for Europe and Britain’s mobile network sector. Yesterday I wrote a pre-Brexit piece, asking what might happen in the event of Brexit. In that we reported comments from Vodafone CEO Vittorio Colao that the operator may move its global HQ if it feels it needs to. At the other end of the scale we heard from a new start-up, based in Germany, that was seriously considering an expansion into the UK and a relocation of its HQ. That will not happen now.
We also looked at what some of the regulatory implications might be in terms of spectrum policy, market consolidation and competition, annet neutrality and data privacy laws.
Today I have asked a few of the main Group operators for updated statements and this is what I got. I am told Orange are also due to release a statement at any moment.
Deutsche Telekom – can we maintain an open economic border?
“A bad day for Europe. In a globalised and increasingly digitalised world large, unified markets are important in order to be competitive. There it would have been good if the British had opted for Europe.
We all have to analyse why the European idea -of which I am deeply convinced – has so clearly lost its fascination for many people.
At the same time we must pay attention in the ensuing BREXIT process that we maintain the economic border with the United Kingdom permanently open.”
Vodafone – much less forthright than CEO’s previous comments:
“It is too soon to form a view on the implications of the referendum outcome for the domicile of the group.
“The political and economic consequences of the UK’s withdrawal from the EU are for others to consider now that the UK electorate has reached its decision. In terms of the implications for Vodafone, each of our country businesses operates as a standalone entity able to adapt to a wide range of local conditions. As we said before the referendum, we remain committed to supporting our UK customers regardless as to the outcome, now and in the future. It is too soon to form a view on the implications of the referendum outcome for the domicile of the Group.”
“We are saddened about the UK decision to leave the European Union, even if we fully respect the democratic choice of British citizens.
“Orange strongly believes in the benefits of the EU, in particular to trigger a real Digital Single Market for the Europeans. At the same time, we call upon a more pragmatic approach to defend EU businesses, jobs and customers in a worldwide competition reinforced by the digital revolution.
“Orange serves 80 million mobile customers in 8 European countries, of which 7 are part of the EU (France, Poland, Spain, Belgium, Romania, Slovakia, Luxembourg). Since the sale of EE, our joint operation with DT, to BT, we are no longer present on the British market as a B2C operator. However, we have several Group offices in the UK, where we employ around 900 people (Innovation, Marketing, Technology, Wholesale, Brand, Communication, B2B). We plan to maintain those offices.
“Regarding the Group’s financial exposition and balance sheet, the current situation has no direct impact on Orange. The Group is covered against movements in the sterling and dollar exchange rates.”
But despite these calming statements from the operators, the fact remains that the principle immediate impact is going to be uncertainty. Make no mistake, things just changed.