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The British government said a stake in Vodafone by a UAE-backed telecommunications group posed a national security risk and ordered the companies to take steps to mitigate it.
In a statement released on Wednesday evening, the Cabinet Office said the stake held by Emirates Telecommunications, also known as e&, posed risks given the importance of Vodafone to the UK’s telecommunications sector and of its role as supplier to government ministries.
e& began taking a stake in Vodafone in 2022 and increased it last year to almost 15%. In May last year, the companies announced a strategic partnership which saw e& sit on Vodafone’s board.
The Cabinet Office said the strategic relationship would “enable it to materially influence Vodafone’s policy”.
The government had not previously revealed that it was reviewing the relationship between Vodafone and e&. Under the National Security and Investment Law, which took effect in 2022, the government has the authority to review foreign takeovers of companies in sectors related to national security.
Following the review, the Cabinet Office said Vodafone and e& must meet certain requirements in relation to any change or breakdown in their strategic relationship.
The companies should also establish a “national security committee” to oversee any work by Vodafone that “impacts on or concerns the national security of the United Kingdom”.
In a statement, Vodafone said it was “pleased to have received clearance in our domestic market for our strategic relationship agreement with e&, and to have e& sit on our board of directors.”