Blog: In a time of Global upheaval what might be the consequences for Global Telecoms?

If we were wondering if 2016 would go down as a seismic year, we need wonder no more. After Donald Trump’s victory in the US presidential election this week, this will be a year that future historians will point to as a year of great change, and more than that, a year where accepted notions were flipped on their head. Free trade and globalism, long the bedrocks of international trade and politics, are suddenly decried by the man who will be the next leader of the western world. For those of us used to global telecoms operating freely on a global scale, a whole new viewpoint may be required. If campaign pledges to rip up free trade agreements and embrace isolationism come to pass, what might the impact be on global telecoms?

In the short term, possibly expect further currency destabilisation and seek to guard against this when constructing global telecoms deals. Just like the pound after Brexit, the US Dollar took an immediate hit after the election result, but then bounced back. TNC recently published an excellent blog on the impact of the weakening Pound on global telecoms contracts and the same principles should be applied now. Since Brexit the Pound has continued to fluctuate with occasional more drastic drops or rises following certain announcements. We at TNC are certainly telecoms rather than currency experts but we can realistically imagine the same pattern occurring again in the coming months. With many global WAN contracts involving payments and underlying costs in US Dollars, great care should be taken. Seek to introduce safeguards and carefully consider the importance of specific currency exchange provisions in global telecoms contracts.

If barriers are introduced to free trade, either in Europe following Brexit or in the US once Mr Trump takes office, what might that do to global telecoms buying strategies? TNC has long been highlighting the emergence of hybrid WANs, where instead of an ‘MPLS fits all’ model, a blend of MPLS and internet services are integral to the network design. Such a model can lend itself to local procurement of internet services and particularly if barriers to cross-border deals arise either in tariffs for imported network equipment or in additional paperwork, this model may grow even further in appeal.

For the arenas of Voice and Mobile, where cross-border international deals are already complex and subject to often difficult arrangements between global suppliers and local services, barriers to cross-border free trade would continue to leave local procurement as the easier option. The holy grail of that ‘global mobile deal that works for all my territories’, already somewhat mythical given the stated difficulties, may be about to move further out of reach.

The only thing certain in 2016 is uncertainty and in uncertain times our best advice is to ensure global telecoms deals contain the ability to restructure the size and shape of your global telecoms deal. Is that hard to achieve with suppliers who want all manner of minimum commitment? Potentially – but it is not impossible. And even in uncertain times TNC can certainly assist in helping you construct such deals.

Clare Tyndall, Principal Consultant

Published on 15th November 2016

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