Former Tory leader Sir Iain Duncan Smith warned the merger between Vodafone and Three was “dangerous” and risked giving a company with roots in Communist Party-ruled China a more prominent place on Britain’s mobile network.
The former Works and Pensions Secretary and MP for Chingford and Woodford Green said the proposed deal raises serious questions about national security and competition in the UK telecoms market.
Vodafone and Three, which both have millions of customers in the UK and Ireland, announced last month that they were joining forces in a multi-billion dollar deal that would reportedly create one of Europe’s largest 5G networks.
“This is a dangerous deal that appears to be another example of the Communist Party trying to create Western dependence on China,” Sir Iain said The Independent. “Not only does it raise important competitive issues, it also poses risks to our communications networks and personal data.”
Three is owned by CK Hutchison, a Hong Kong-listed conglomerate accused of aiding repression in the former British territory from which thousands of residents fled after China implemented a sweeping national security law that authorities intended to use to crack down on dissidents regime in Beijing.
Sir Iain is among a number of cross-party MPs raising concerns about China’s growing influence in the West, and particularly the telecoms companies that are headquartered there and have operations in the UK.
“The government still doesn’t seem to understand that Chinese companies can be forced to hand over their data to Beijing on the fly,” Sir Iain said.
“We should really be worried about that. I also think we need to take a closer look at who owns these companies, their ties to the Chinese government, and where the money that flows through them comes from.”
Last autumn, the government announced that Shenzhen-based Huawei technology must be removed from the UK’s public 5G networks by the end of 2027. She did so following advice from the National Cyber Security Center and pressure from Washington, which had banned devices manufactured by the company because they posed an “unacceptable risk” to US national security.
In March, Prime Minister Rishi Sunak warned that China was planning to “reshape” the world with plans that presented a time-defining challenge for the UK and its western allies, but dismissed calls for Beijing to be classified as a threat, which his predecessor had done Liz Truss urged.
The 1.4 million-member Unite union is also fighting the merger, which some analysts say could result in job losses and higher prices for consumers already suffering from the cost-of-living crisis. The deal has triggered an initial investigation by the Competition and Markets Authority and is subject to approval under the new National Security and Investment Act.
Gail Cartmail, Managing Director of Unite, said: “Rather than stand by while the CK Group rakes in profits from UK companies, the government should be asking if they are a suitable steward of UK assets.”
Charlotte Nichols, Labor MP for Wigan North and a member of the Department for Business and Trade’s subcommittee on national security, said: “Unite the Union has shared research with me showing this merger is leaving behind sensitive government contracts and the data of millions of British consumers in the hands of Three, a company whose key leadership has supported Hong Kong’s repression and has worked hand-in-hand with the Chinese state for decades.
“This will be a dangerous deal for the UK and I fully support Unite’s campaign against it.”
Other MPs – both Labor and Conservative – have put questions to government departments about the safety assessments ministers have made of the proposed merger deal.
Both Three and Vodafone declined to comment, but previously dismissed security concerns, saying they work closely with security agencies in a regulated industry.
The Cabinet Office said it welcomes foreign trade and investment “where it supports growth and jobs in the UK, meets our strict legal and regulatory requirements and does not jeopardize our national security.”
“However, we will not hesitate to use our powers to protect national security when we identify concerns.”