LetterOne pushes back against government order to sell Upp


The investment firm argues that it is not a threat to national security and that it will fight for the right to own the UK altnet

At the start of 2021, private investment firm LetterOne acquired a 100% stake in UK altnet Upp, with the goal of investing £1 billion to build a full fibre network in the East of England.

The deal was immediately controversial, with politicians and security experts calling into question the national security implications of LetterOne’s ownership and ties to the Russian government.

Co-founded by Russian billionaires, Mikhail Fridman and Petr Aven, back in 2013, LetterOne’s ownership of a critical infrastructure network in the UK could give them illicit access to sensitive information.

“I do think in the UK, if we’re serious about pushing back on potential malign influence, we need to be very careful,” Conservative MP Bob Seely told The Telegraph at the time.

Naturally, these concerns were only exacerbated by the Russian invasion of Ukraine in February 2022, which saw the two oligarchs quickly sanctioned by the UK government.

LetterOne responded to these concerns by freezing out Fridman and Aven, including removing their access to the company’s building and shutting down communications access to other employees.

However, the seeds of mistrust had already been sewed and, in December last year, the UK Secretary of State for Business, Grant Shapps, enacted powers bestowed by the National Security and Investment Act (NSIA) and ordered LetterOne to sell its entire stake in Upp.

The decision marked only the fifth time NSIA powers had been invoked, with all four previous iterations relating to Chinese companies.

LetterOne, naturally, maintains that it does not represent a threat to the UK’s national security, noting that the business itself is not under sanctions.

Now, the firm is making a formal legal challenge against the decision, seeking to have the ruling overturned.

“L1 is not sanctioned and has taken fast, decisive action to put in place strong measures to distance itself from its sanctioned shareholders,” said the company in a statement. “They have no role in L1, no access to premises, infrastructure, people and funds or benefits of any description.”

The company notes that Upp is compliant with all of Ofcom’s rules regarding security, is run by a UK leadership team, and has a board of directors comprised of individuals from the UK, the US, and the EU.

LetterOne, which also owns health food chain Holland & Barrett, has made a very public effort to distance itself from its Russian owners, including reshuffling its own board and reallocating some of the funds that would have gone to its frozen stakeholders to charitable causes.

“We’re going to be one of the largest charitable givers, certainly in the UK,” LetterOne’s chairman Mervyn Davies told the Financial Times in December.

Whether this will be enough to help convince a UK court to reverse the government’s decision remains to be seen.

How is the UK altnet landscape evolving in 2023? Join the ecosystem in discussion at next weeks Connected North conference live in Manchester

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