The UAE’s stake in Vodafone poses a security risk to Britain, ministers say
Investments in Vodafone by the United Arab Emirates pose a security risk, the government has said.
Deputy Prime Minister Oliver Dowden said the nearly 15 percent stake held by state-controlled Emirates Telecommunications poses a threat to Britain, given Vodafone’s work with government departments and its influence over the British telecoms industry.
The Cabinet Office has instructed companies to address these issues.
The order came hours after Culture Secretary Lucy Frazer ordered further regulatory scrutiny of Abu Dhabi-backed investment group Redbird IMI’s £600m bid for the Telegraph newspaper group.
Ofcom and the Competition and Markets Authority (CMA) are assessing the deal and will report to Frazer today.
Security alert: Emirates Telecommunications is 60% owned by the UAE government and has built a holding company in Vodafone, which is run by Margherita Della Valle (pictured)
Emirates Telecommunications is 60 percent owned by the UAE government and has built a holding company in Vodafone, which has been run by Margherita Della Valle since 2022.
Also called e&, it now has a 14.6 percent stake in Vodafone – and is the largest shareholder.
In May, it announced a strategic partnership that gave Hatem Dowidar, CEO of e&, a seat on Vodafone’s board.
But Dowden has now said the arrangement would allow the company to exert “material influence” and has ordered Vodafone to set up a national security committee to oversee sensitive work affecting Britain.
It must also inform ministers of any change or termination of the partnership and meet certain requirements about who sits on the board.
Karen Egan, a senior telecoms analyst at Enders Analysis, said the risks include cyber attacks, interception and network shutdowns. But the order does not block cooperation, meaning a partnership can be formed.
This is despite accusations of online censorship at e& and alleged attempts to spy on its citizens. Vodafone said it was “pleased that we have received approval for our strategic relationship in our home market.”
The government has the power to review foreign takeovers under the National Security and Investment Act, which came into force in 2022 and was used to approve the sale of Newport Wafer Fab – one of Britain’s few semiconductor companies – to China’s to block Nexperia.
But Vodafone is also facing an investigation by the UK competition regulator over its planned merger with Three.
The CMA said yesterday it planned to open an investigation into the deal “very soon”.
It came after a PR representative for Vodafone and Three accidentally released a statement that would not be published until after the CMA investigation was announced. This statement included comments from the British bosses of both companies claiming that the merger would ‘significantly increase’ competition and investment. .
Vodafone and Three announced plans in June to form a £15 billion joint venture, which would be 51 percent owned by Vodafone and 49 percent by Hong Kong’s CK Hutchison, owner of Three.