The British government has ordered the sale of Upp, a regional broadband provider owned by the oligarch-backed investment firm LetterOne, citing national security concerns.
LetterOne acquired Upp in 2021 as part of a £1billion plan to build a regional UK broadband network to compete with BT which would have covered 1million premises in the east of England by 2025.
Its owners, including Russian oligarchs Mikhail Fridman, Petr Aven and German Khan, have faced sanctions in various jurisdictions.
Grant Shapps, secretary of state for business, energy and industrial strategy, said Monday that LetterOne’s ownership of Upp posed a “national security risk.”
Under the UK National Security and Investment Act which came into force this year, Shapps ordered LetterOne to sell Upp within a specified period. The government also required Upp to carry out a security audit of its broadband network before the sale.
LetterOne, which owns retailer Holland & Barrett, has sought to sever ties with its founders to prevent sanctions against the company, including blocking its owners from making decisions and freezing their shares and dividends.
LetterOne said it was disappointed with the decision. In a statement, he said that “L1 is unsanctioned and has taken quick and decisive action to put in place strong measures to keep L1 away from its sanctioned shareholders. They have no role in L1, no access premises, infrastructure, people and funds or benefits of any description.
He added that the Upp “already has processes in place that remove any perceived threat to national security”, with a British management team and a governance model with only British, American and European staff on the board. administration.
“We believe that the UPP’s L1 property does not pose a threat to national security in any way,” he said.
The deal was welcomed when first struck by former Prime Minister and local MP Liz Truss, who said “the £1billion investment and hundreds of jobs of Upp are great news”.
The National Security and Investment Act came into force on January 4, 2022 and allows the UK government to review transactions for up to five years after they are signed.
The law has only been used a few times this year, including to terminate an intellectual property licensing agreement between Beijing Infinite Vision Technology and the University of Manchester.
More recently, the acquisition of Newport Wafer Fab by a Chinese semiconductor maker was blocked, using retroactive powers to review a transaction that predated the start of the NS&I Act.
Upp’s sale marks the first time the deed has been used in a deal involving sanctioned Russian individuals.