UK orders sale of Russian-backed broadband firm citing security

LONDON (Reuters) - Britain has ordered Russian oligarch-backed investment company LetterOne to sell regional broadband provider Upp Corporation, saying its current ownership was a national security risk.

British Business Minister Grant Shapps said that the risk to national security relates to "the ownership of Upp ... and Upp's expanding full fibre broadband network."

LetterOne or L1, whose owners include oligarchs Mikhail Fridman and Petr Aven, said it was disappointed by the British government's decision to order it to sell 100% of Upp within a specified period and by following a specified process.

"We believe that L1 ownership of Upp is not a threat to national security in any way," said L1, which bought Upp, previously known as Fibre Me Limited, in 2021.

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

Earlier this year, the British government used the National Security and Investment Act, which came into force in January, to order Chinese-owned technology firm Nexperia to sell at least 86% of Britain's biggest microchip factory, Newport Wafer Fab.

The Act allows the government to scrutinise and potentially block acquisitions and investments in sensitive sectors.

Shapps said Upp must complete a security audit of the Upp network prior to its sale.

L1 noted that it had gained government endorsement for Upp in 2021, when its investment was welcomed.

Britain, along with Western allies, has been imposing sanctions against Russian individuals, banks and strategic industries since Russia began what it calls a "special military operation" in Ukraine in late February.

(This story has been refiled to fix a typographical error in paragraph 8)

(Reporting by James Davey; Editing by Alexander Smith)