Former Tory leader warns Vodafone and Three merger poses ‘dangerous’ security risk

Vodafone and Three’s multibillion pound merger sparks concerns over security due to links to China

Vodafone and Three announced last month that they would merge and create one of Europe’s largest 5G networks (Getty)

Former Tory leader Sir Iain Duncan Smith has warned that the merger between Vodafone and Three is “dangerous” and risks giving a company with its roots in Communist Party-ruled China a more prominent place in the UK’s mobile network.

The former work and pensions secretary and MP for Chingford and Woodford Green said the proposed deal raised serious questions about national security and competition within the UK telecommunications market.

Vodafone and Three, both of which have millions of customers in the UK and Ireland, announced last month that they were joining forces in a multibillion-pound deal they said would create one of Europe’s biggest 5G networks.

“This is a dangerous deal, which it seems is yet another example of how the Communist Party is trying to create a Western dependency on China,” Sir Iain told The Independent. “Not only does it raise important questions about competition, but it poses risks to our communication networks and personal data.”

Three is owned by CK Hutchison, a Hong Kong-listed conglomerate that has been accused of supporting repression in the former British territory, from which thousands of residents fled after China’s implementation of a sweeping national security law used by authorities to crack down on dissent against the regime in Beijing.

Sir Iain is among a number of cross-party MPs to raise concerns about the growing influence of China in the West, and in particular, telecoms companies who have their headquarters there and are operating in the UK.

“The government still doesn’t seem to understand that Chinese companies can be mandated to hand over their data to Beijing at the drop of a hat,” Sir Iain said.

“We should be really worried about that. I also think we need to be taking a closer look at who owns these companies, the links between them and the Chinese government and the origins of the money flowing through them.”

Sir Iain Duncan Smith says that the Vodafone and Three merger poses security risk (PA Archive)

Last autumn, the government announced that Shenzen-based Huawei technology must be removed from the UK’s 5G public networks by the end of 2027. It followed advice from the National Cyber Security Centre and pressure from Washington, which banned equipment made by the company because it posed an “unacceptable risk” to US national security.

In March, prime minister Rishi Sunak warned that China aims to “reshape the world” in plans that pose an era-defining challenge for the UK and its allies in the West but he dismissed calls for Beijing to be categorised as a threat, something his predecessor Liz Truss had pushed for.

The union Unite, which has 1.4 million members, is also campaigning against the merger, which some analysts say could result in job losses and higher prices for consumers who are already being squeezed by the cost-of-living crisis. The deal has triggered an initial investigation by the Competition and Markets Authority and will be subject to approval under the new National Security and Investment Act.

Gail Cartmail, Unite’s executive head of operations, said: “Instead of idly watching the CK Group cream profits from UK businesses, the government should ask if they are a suitable custodian of British assets.”

Former prime minister Liz Truss has also raised concerns about China’s influence (PA Wire)

Charlotte Nichols, the Labour MP for Wigan North who sits on the Department for Business and Trade sub-committee on national security, said: “Unite the Union has shared research with me that shows this merger would leave sensitive government contracts and the data of millions of UK consumers in the hands of Three, a company whose key leadership have supported repression in Hong Kong and worked hand-in-hand with the Chinese state for decades.

“This will be dangerous deal for the UK and I fully support Unite’s campaign against it.”

Other MPs – both Labour and Conservative –  have tabled questions to government departments asking what security assessments ministers have made of the proposed merger deal.

Both Three and Vodafone refused to comment but have previously dismissed concerns about security, saying that they work closely with security bureaus in what is a regulated industry.

The Cabinet Office has said it welcomes foreign trade and investment “where it supports growth and jobs in the UK, meets our stringent legal and regulatory requirements, and does not compromise our national security”.

It added: “However, we will not hesitate to use our powers to protect national security where we identify concerns.”