By Saabira Chaudhuri
LONDON -- As British politicians attempted Tuesday to reassure
investors and businesspeople about the economics effects of a
Brexit, one of Britain's biggest corporate giants said it may move
its headquarters out of the country because of the vote.
Vodafone Group PLC, the world's second largest mobile carrier by
subscribers after China Mobile Ltd., said the long-term location of
its global headquarters was now in doubt because of the
uncertainties over how and when the U.K. would disentangled itself
from the European Union, after the country voted for breaking away
last week.
The vote has also clouded the future of an GBP18 billion pound
($24 billion) nuclear project in the U.K. that still awaits a final
green light by its contractor, French power utility Electricite de
France SA, better known as EDF. The construction of two nuclear
reactors in Hinkley Point in southwestern England has the backing
of the U.K. and France, which has a majority stake in EDF, but is
waiting for the nuclear-power utility's board to sign off on the
project. A Chinese firm is also a major backer of the project.
EDF's board hasn't yet approved the project amid a number of
issues including its cost. The company's six representatives on the
board -- out of an 18-member board -- reiterated their opposition
to the project during a meeting Tuesday, two of them said after the
meeting. A possible exit by the U.K. from the EU is another
concern.
"A possible Brexit was a concern we had before the vote," one of
the two the board member said. "Now that it is a fact, we see a
weakening of the political environment in the U.K. and a volatile
public opinion that questions many things."
Both developments underscores the longer term uncertainty the
vote has created for British and foreign firms, apart from the
market sell off immediately afterward. U.K. Business Secretary
Sajid Javid on Tuesday moved to reassure global investors and
British businesses that the country is "open for business,"
convening a round table of business leaders he said would be the
first of several meetings.
As markets grapple with the ramifications of Britain's
referendum result for the global economy, and with the political
tumult the vote has sparked in the U.K., attention is turning to
the deal the U.K. must negotiate with the EU to allow it to
continue to benefit from free trade across the bloc.
For Vodafone, the timeline of those talks is too long and
uncertain for the company to guarantee Britain would remain its
home.
Vodafone said in a statement late Tuesday that it gained many
benefits through the U.K.'s EU membership, including the bloc's
free movement of people and the benefits of a single legal
framework throughout Europe.
The company said it wasn't yet possible to gauge how these
positive attributes of EU membership would be affected after the
U.K. leaves the EU, a process that could take two years or more,
making it impossible "to draw any firm conclusions regarding the
long-term location for the headquarters of the group," Vodafone
said. "We will continue to evaluate the situation and will take
whatever decisions are appropriate in the interests of our
customers, shareholders and employees."
Vodafone said a "very large majority" of its 462 million
customers, 108,000 employees and 15,000 suppliers were based
outside the U.K., where it has offices in Newbury, England, and
London. It said 55% of its earnings before interest, taxes,
depreciation and amortization came from Europe, excluding the
U.K.
Vodafone has hinted for months that it would consider relocating
should the U.K. leave the EU Chief Executive Vittorio Colao, an
Italian, had said before the election that leaving the EU would
hurt Britain's ability to access Europe's digital industry. And on
Friday, the day the election's results were announced, Vodafone
took another baby step by saying it was "too soon" to determine
whether an EU exit would spur it to relocate its headquarters.
Meanwhile, at a press conference in London on Tuesday, Mr. Javid
said the biggest issue raised by business representatives has been
the need to secure continued access to the European Union's single
market and that this would be his "No. 1 priority."
He sidestepped a question on whether he believed Britain could
retain access to the single market without also agreeing to
maintain free movement of labor, saying only that Britain didn't
have to follow the path charted by other countries outside the bloc
that have access to the single market.
"The negotiations have only just started, and over time we will
see what we get," he said.
While Norway has access to the EU market as a member of the
European Economic Area, it has had to agree to allow in workers
from the EU, a concession that is unlikely to gain easy approval in
the U.K. Immigration was a hot-button issue throughout the campaign
that ultimately handed the "leave" side its victory.
Earlier Tuesday, U.K. Treasury chief George Osborne also aimed
to reassure business leaders. At a conference of CEOs in London, he
said the U.K.'s economy is strong and that his priority will be to
help hammer out a plan that offers financial stability and economic
certainty.
The business secretary said that he is engaging with companies
directly and has instructed the heads of the U.K.'s trade and
investment offices around the world to reassure major investors
that the U.K. is an attractive investment destination.
"In the past 48 hours we've heard senior politicians from
Australia, from South Korea, calling for immediate trade talks with
the U.K.," Mr. Javid said, adding that China's Huawei Technologies
Co. has confirmed that its planned GBP1.3 billion investment in the
U.K. will go ahead despite Brexit. Huawei representatives didn't
immediately return calls for comment.
--Stu Woo and Inti Landauro contributed to this article.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
June 28, 2016 20:47 ET (00:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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