China links risk £18bn mobile deal

In Britain, the PS18 billion merger between Three and Vodafone is being scrutinized by all parties in parliament due to its links with China.

Both Conservatives and Labour MPs have asked government departments to explain the effect of a merger between Three, owned by CK Hutchison (a Hong Kong listed conglomerate), and Vodafone on the state contracts.

David Davis, senior Tory MP asked the government what it thought about the possible security and “other” effects of the merger. Apsana Bebum, a Labour Member of Parliament, also asked the government about ” the potential security implications”.

Vodafone and Three finally announced their long-awaited plan to merge into Britain’s largest mobile network this month. The deal triggered a preliminary investigation from the Competition and Markets Authority and is subject to approval by the National Security and Investment Act.

Unite, Britain’s largest union, has been campaigning against this deal. They claim that it will “give a company with ties to China’s state an even greater prominence at the core of the UK’s telecommunications network”.

Unite sent a delegation to the Hutchison annual shareholder meeting held in Hong Kong, last month. They campaigned for the reinstatement of four workers who, according to the union, were unfairly targeted by Hutchison because of their union activities following strike action at the Port of Felixstowe last year, which Hutchison also owns.

Sir Iain Duncan Smith (a former leader in the Conservative Party) told MPs this month during a discussion on the Procurement Bill that he spoke to Unite. He said the government should “look very carefully” at what had happened, especially because it reduced competition in the marketplace. One of the biggest concerns is the links with the authoritarianism in China.

Margherita della Valle is Vodafone’s CEO. She said that the merger will be great for customers, for the country, and for competition.

Robert Finnegan is the chief executive officer of Three UK. He has downplayed security concerns by saying that the company already operates in the UK. “It’s a highly regulated industry, and we work closely with national security bureaus throughout the country.” The stake [of Three] will go from 100% to 49% [of the combined business]. I see no concerns whatsoever.

Cabinet Office stated that as an open economy “we welcome investment when it supports UK jobs and growth, meets our strict legal and regulatory requirements, and does not compromise national security”. The Cabinet Office said that it has “robust” powers to “block or impose remedy on transactions which pose a risk to national security” but cannot comment on particular acquisitions.