UK union Unite has raised concerns about Vodafone's future merger with Three over a conflict of interest, ahead of Vodafone's forthcoming AGM.
The union, which has previously expressed its opposition ahead of the proposed merger of the two telcos in the UK, is aiming to put pressure on some of Vodafone's biggest shareholders to push back at the AGM on conflict of interest grounds.
Feature: The UK’s next big telco merger - Vodafone and Three?
Unite has contacted several Vodafone stakeholders including Blackrock, Vanguard, Norges Bank, and local authority pension funds, asking them to vote against the re-election of David Nish, who is a non-executive director of Vodafone Group and chair of its audit committee.
Nish also currently holds the position of senior independent director (SID) at HSBC Holdings plc.
He is also the senior independent director, chair of the audit committee, and member of the risk committee and the nomination and corporate governance committee at HSBC Holdings plc, notes Unite.
It's his link to HSBC which Unite claim is a conflict of interest, as HSBC's asset management arm holds over 1 percent of Vodafone shares and 0.1 percent of CK Hutchison shares.
"Given the important role the Vodafone audit committee has in overseeing the proposed merger, there are concerns that David Nish faces potential conflicts in his responsibility of overseeing the function and effectiveness of the audit committee," said Unite in a statement.
"Therefore, we believe he should stand down from his role as chair of the committee whilst the merger is still awaiting approval. In lieu of making such a commitment, we ask shareholders to consider opposing the re-election of David Nish at the forthcoming AGM."
Unite has been clear in its opposition to the merger, labeling the deal "reckless" last month, and is urging the government to block any deal being pushed forward.
Vodafone and CK Hutchison's Three agreed to the £15 billion ($19bn) merger last month. The deal will give Vodafone a 51 percent majority stake in the combined entity, currently labeled as "MergeCo", with Three holding the remaining 49 percent.
Unite claims that the deal will lead to increased prices for customers, job losses, and is damaging to the country's national security. It alleges Hong Kong-based CK Hutchison has strong links to the Chinese state.
“This deal will give a company with deep ties to the Chinese state an even more prominent place at the heart of the UK’s telecommunications infrastructure," said Gail Cartmail, executive head of operations for Unite last month.
"On top of that, it will hike people’s bills and mean job losses for Vodafone and Three workers. The government must step in and stop this reckless merger and Unite is building a cross-party coalition to demand they do so.”
Vodafone recently announced plans to cut 11,000 jobs worldwide over the next three years, before the merger was officially agreed upon.
In a recent interview with the Times, Vodafone UK CEO Ahmed Essam warned that the company's investment in 5G infrastructure would be impacted if the proposed deal is blocked by the Competition and Markets Authority (CMA). He said that if the deal is blocked the group “won’t be able to invest as much, and we won’t be able to deliver the 5G ambition that’s coming in the wireless infrastructure strategy from the government.”
DCD has contacted Vodafone for comment.
