It seems like a crazy decision by UK voters, but they did it. Britain has actually voted by a thin margin to leave the EU. I leave the details of all that to those who specialize in it, but what about our little world. What does this mean for telecommunications and infrastructure companies? A few thoughts, followed by a poll.
- Uncertainty - In the short term, nothing actually happens except in perception. It will be a two year negotiation, if not more, and in the meantime everything will be as it has been up until yesterday. Everything, except the fact that the future just got extremely foggy. The natural enemy of investment is uncertainty, and thus there is a chance that projects that can be delayed will be. Telefonica is already said to be considering delaying the IPO of Telxius in the wake of the market response to Brexit.
- Regulatory limbo - On the one hand, the smart thing would be to keep things simple. There doesn't need to be a sudden, sharp regulatory divide between the UK and the European community, and hopefully the politicians will be intelligent not to kick over more hornets nests than they can handle at once. Reclaiming sovereignty by deciding to not to do anything differently than was being done before would be the bright move. However, that assumes rationality, and the Brexit vote was an emotional one not a rational one. The fear is that it will turn into a pointless mess, but perhaps the hotter heads will spend their time meddling elsewhere in the economy with things like beer, cheese, and pillows, and let cooler heads keep that from happening to fiber and data.
- Subsea Shifts - How many transatlantic cables go through England to get to Europe? London has long been the gateway hub everything passed through on the way to continental European markets. Lately though, we have seen some activity over on the coast of Ireland, and there's been talk of putting in direct links from those cables to continental Europe, bypassing the UK entirely. We also have Telefonica's new transatlantic cable plans between Spain and Virginia Beach. I'd have to guess those projects just got a big boost if London's position as gateway to Europe erodes. Alternatively, if geography and not politics makes London that hub, then it won't matter as much.
- Traffic growth doesn't care - Whether Britain leaves the EU or not, people are going to use more and more data, the IoT is coming, and the infrastructure will have to keep up. So to an extent, any changes on the demand side of things will be blips. Below the layer of politics, fiber is still fiber, towers are still towers, and the people building and maintaining them won't do anything differently nor will we need fewer of them to do it. It's at the executive level that the decisions got harder today, but, as they say, that's why you guys get paid the big bucks.
Any other thoughts? Ramblings? Speculation? Rebuttal? Post a comment below.
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