Vodafone warned of ‘profound national security questions’ over merger with Chinese-owned Three1 Apr 2023 23:23
From the Telegraph
Vodafone has been warned by union bosses that the planned merger of its UK arm with Chinese-owned rival Three raises “profound national security questions” relating to sensitive official contracts.
Officials at Unite have written to Margherita Della Valle, interim chief executive of Vodafone, to express their “grave reservations” about CK Hutchison, the Hong Kong-based parent company of Three.
The proposed multibillion-pound tie-up has been under discussion for many months and would create a single operator with 27 million customers. It could prove to be the biggest test to date of new takeover laws aimed at safeguarding national security, however, amid mounting concern over Chinese involvement in critical infrastructure.
Unite accused Li Ka-shing, the billionaire owner of CK Hutchison, and his family of political “collaboration” with the Chinese state. Mr Li and his son Victor hold civil and political roles, and sat on the election committee that pushed through pro-Beijing candidate John Lee Ka-chiu as chief executive of Hong Kong.
The union, which was involved with a dispute with CK Hutchison at the Port of Felixstowe last year, also pointed to previous comments by Mr Li in support of Hong Kong’s sweeping new national security laws. They have helped Beijing to stamp out dissent and tighten its control over the former British colony.
Unite wrote: “A tie-up between Vodafone and Three would give the CK group a far more prominent and powerful place at the very heart of the UK’s telecoms infrastructure, and we therefore believe that such links prompt significant national security questions regarding any proposed merger.
“In particular, given Vodafone’s position as a strategic supplier to the UK public sector, we believe there are profound national security questions to be asked about involving the CK group in sensitive government contracts."
Vodafone has responded to the letter but refused to meet officials at Unite until any deal is finalised.
Unite’s intervention marks the latest sign of opposition to a deal between Vodafone and Three. The Telegraph also understands that Sky expects to resist the merger, with a source arguing that the two companies were planning to “raise prices for consumers because they haven’t managed their businesses well”. Vodafone and Three have argued their returns are too low and they must be allowed to merge to cut costs to fund investment in mobile coverage.
Unite is now planning to devote considerable resources to lobby politicians and regulators to oppose the merger. The National Security and Investment Act, which was introduced in 2021, aims to address worries about the
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