The UK’s departure from the EU generates both uncertainty and opportunity for telecommunications providers functioning in the UK. As the UK discusses its exit, providers should plan for the possible effects of numerous scenarios. For instance, how will tax divergence and regulatory in the UK and EU change foreign operators? Will alterations in the free movement of people drain the talent pool? Will there be chances for capital investment and/or deal activity for foreign investors? If the EU’s Digital Single Market initiative does not apply in the UK, how will it change the provision of digital content services?
A suitable starting point to assess company-specific implications is to check for sensitivity to the four key issues from Brexit: the well-being of the UK economy; your exposure to the UK’s legal, tax environment, and regulatory; how much you trust on selling cross-border facilities; and how dependent you are on free movement of staff between the EU and the UK.
- Reviewed economic forecasts may change plans; sluggish growth increases the need for price management; prospects arise to acquire targets in UK/EU if share prices come under pressure; companies may restructure or relocate.
- Shortage of certainty increases risks across all areas of business and future deals.
- Provider/supplier relations may need revision for restrictions on movements of goods and services.
- CFOs may need to revise market forecasts or rise cost management initiatives. The taxation of business transactions may change with respect to income and consumption taxes, as well as for customs duties and other levies imposed at the border. Changes in tax treaties involving the US may arise as well.
- Brexit changes to the legal framework may necessitate the restructuring of contracts. Divergence of UK and EU regulations may change compliance responsibilities.
- UK may no longer be a part of the EU’s General Data Protection Regulation framework, companies should monitor standard setting and any changes to the EU’s Digital Single Market.
- Businesses may not know positions of employees and may need to plan for work permits and visas to ensure mobility. Limits on inward migration could alter the pool of available talent, changing hiring, recruiting, and retention plans.
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