UK operators ponder next moves as Brexit sinks in

Operators are still digesting the potential impact of the UK's decision to leave the European Union (EU), with most attempting to present a calm front in the face of plunging markets and share prices.

Ahead of the referendum on Jun. 23, several major operators including Vodafone, BT and Three UK owner CK Hutchison had called for the UK to vote to remain in the EU. Now that the 'leave' campaign has won -- albeit by a very small majority -- operators could have some tough decisions to make.

For example, there are already rumours that Telefonica is considering delaying a planned initial public offering (IPO) for its Telxius towers unit because of the market volatility after the UK referendum, while a possible IPO for O2 UK could also be put on hold.

Citing unnamed sources, Bloomberg suggested that the Spain-based company had been planning to announce the Telxius IPO next week, with hopes of raising €1.5 billion ($1.66 billion). As for O2, Kepler Cheuvreux told Bloomberg that Brexit could see the UK mobile operator's value fall by 20 per cent and complicate its restructuring.

Telefonica has since told Reuters that it is in no rush to make a decision about either of the two companies, further noting that it is "under no pressure" to make a decision on O2. The operator added that it was also maintaining its financial objectives for 2016.

Meanwhile Vodafone CEO Vittorio Colao previously hinted that the company could move its headquarters out of the UK if it left the EU, according to a BBC News report. However, the company is now saying it is too soon to form a view on what Brexit means for its HQ, Reuters reported.

BBC News noted that Vodafone is the seventh largest company listed on the London market, with operations in 26 countries and about 100,000 staff. The UK accounts for about 10 per cent of its profits and sales.

Orange has already said that it plans to maintain several group offices in the UK, noting that it is not present on the consumer telecoms market and that the referendum result had no direct impact on its financial exposure and balance sheet, Reuters reported.

CK Hutchison also told Reuters it was confident its UK business would continue to thrive, without giving further details. However, company owner Li Ka-shing had previously told Bloomberg TV that Brexit would be detrimental to the UK and would also have a negative impact on Europe.

Deutsche Telekom CEO Timotheus Höttges probably summed up the feelings of many telecoms leaders when he described Jun. 23 as "a bad day for Europe".

"It would have been good if the British had opted for Europe," Höttges said via Twitter.

Deutsche Telekom recently sold its EE joint venture with Orange to BT, but gained 12 per cent of the British telco in return.

The coming weeks and months should bring more clarity over the UK's post-Brexit plans and the repercussions of this momentous decision on companies in all sectors.

For more:
- see this Bloomberg article
- see this Reuters article
- see this BBC News article
- see this separate Reuters article
- see this other Reuters article
- see this separate Bloomberg article

Related articles:
Analysts see Vodafone as safe haven, risks for others after Brexit vote
How could a UK exit from the EU affect the telecoms sector?
Mallinson: Brexit referendum affects EC decision on proposed Three/O2 UK merger
Vodafone UK seeks to stem rising tide of consumer complaints
EC proposes caps on wholesale roaming charges

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