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The UK government has said that a stake held in Vodafone by a UAE-backed telecoms group is a national security risk and ordered the companies to take steps to mitigate it.
In a statement published late on Wednesday, the Cabinet Office said the stake held by Emirates Telecommunications, which is also known as e&, posed risks given Vodafone’s importance to the UK’s telecommunications sector and its role as a supplier to government departments.
e& began building a stake in Vodafone in 2022 and last year increased it to almost 15 per cent. In May last year, the companies announced a strategic partnership that handed e& a seat on Vodafone’s board.
The Cabinet office said the strategic relationship would “enable it materially to influence the policy of Vodafone”.
The government had not previously disclosed that it was reviewing the relationship between Vodafone and e&. Under the National Security and Investment Act, which came into force in 2022, the government is able to review foreign takeovers of companies in industries that have ties to national security.
Following the review, the Cabinet Office said that Vodafone and e& had to meet certain requirements relating to any alteration or termination of their strategic relationship.
The companies would also have to establish a “national security committee” to oversee any work by Vodafone that “has an impact on or is in respect of the national security of the United Kingdom”.
In a statement, Vodafone said it was “pleased to have received clearance in our home market for our strategic relationship agreement with e&, and for e& to take a seat on our board”.
