Telecoms merger under spotlight

VODAFONE has said it is co-operating with a national security review into its planned £15bn merger with Chinese-owned rival Three.

The telecoms giant last year agreed to merge with Three in a deal that will create the UK’S largest mobile network with more than 27m customers.

However, the tie-up has attracted scrutiny amid concerns that Three’s Hong Kong-based parent company, CK Hutchison, could be granted access to sensitive national infrastructure.

Asked if the Government was reviewing the deal under the National Security and Investment Act, Vodafone boss Margherita Della Valle said: “Yes, absolutely, as with all similar deals we are engaged in the NSA process for the merger between Vodafone and Three.”

Ms Della Valle said both companies were subject to “very strict protocol in terms of data protection law [and] telecoms security”.

She added: “I think it proves the rigorous protocols we are all under and constitutes a model that is applicable for different situations.”

China-sceptic MPS and union chiefs have raised concerns about the merger with Three due to Vodafone’s sensitive government contracts and network of undersea cables. Li Ka-shing, the billionaire Hong Kong owner of CK Hutchison, has been accused by the Unite union of political “collaboration” with the Chinese state.

Vodafone and Three have rejected the concerns, arguing that CK Hutchison has been in the UK market for two decades.

In addition to Three, the conglomerate also owns the Port of Felixstowe, health and beauty chain Superdrug, the rolling stock leasing company Eversholt Rail, the electricity distribution infrastructure UK Power Networks and Northumbrian Water.

Ms Della Valle stressed Vodafone will own 51pc of the joint venture and will appoint its boss, while there are plans to dilute the Chinese share over time.