The UK government has stated that the ownership of Vodafone by a telecoms group backed by the United Arab Emirates could potentially pose a threat to national security.
On Wednesday evening, the Cabinet Office released a statement cautioning that the 14.6% ownership of Vodafone by Emirates Telecoms (also referred to as e&) raises security concerns due to Vodafone’s integral role in the country’s telecommunications industry.
Vodafone has been instructed to create a “national security committee” that will supervise and oversee any potentially sensitive projects that could affect national security.
The government stated that the measure is both “essential and appropriate” to “reduce the threat to national security.”
The alert was issued following a move by e&, a company majority-owned by the UAE government, to increase their ownership in Vodafone. This came after an initial investment of £3 billion in 2022. In April, e& raised their stake to 14.6% and formed a strategic partnership, resulting in e& CEO Hatem Dowidar joining the Vodafone board.
The government’s attention was drawn to the agreement under the National Security and Investment Act 2021, as Vodafone is a crucial supplier for the UK government and plays a role in the country’s cybersecurity infrastructure. Despite this, the government had not publicly disclosed their investigation of the partnership prior to this.
The Cabinet Office announced that the collaboration would give e& significant influence over policy at Vodafone.
Secretary of State Oliver Dowden, from the Cabinet Office, has issued multiple orders, stating that the UK government must be informed of any alterations in the relationship. Additionally, Vodafone’s board structure and duties must adhere to the requirements set forth by the UK government.
According to the conditions of the strategic alliance, e& has the option to raise its ownership to slightly below 25%, and may also appoint an additional executive to the board if its ownership exceeds 20%.
The government-owned company has previously stated its intention to remain a long-term and supportive shareholder in Vodafone. They have no desire to control or influence the company’s board or management team. The company operates in 16 countries in the Middle East, Asia, and Africa, and has approximately 164 million customers worldwide.
A representative from Vodafone stated: “We are happy to have obtained approval in our domestic market for our strategic partnership agreement with e&, as well as for e& to join our board.”
The Guardian reached out to e& for their response.