Cable and Wireless worked with a British government spy agency to hand over the Internet data of millions of people around the world, according to international media reports.
The news breaks amid rising regional concerns about the US$3 billion acquisition by Cable and Wireless of Columbus International, a major telecommuniations operator in the Caribbean.
A report from industry site wired.co.uk said Cable and Wireless gave Government Communications Headquarters (GCHQ) "unprecedented access to vast swathes of UK internet data".
In 2007 GCHQ devised a plan called Mastering the Internet, whereby private companies would collect internet data for them. UK Channel 4 News reported that Cable and Wireless played a leading role in creating the surveillance system, which was exposed by Edward Snowden.
"Top secret documents leaked by the whistleblower Edward Snowden and seen by Channel 4 News show that GCHQ developed what it called 'partnerships' with private companies under codenames. Cable and Wireless was called Gerontic," the Channel 4 News report said.
"Regular meetings took place between GCHQ and Cable and Wireless, while payments were also made to the telecoms company to fund the huge costs of siphoning off so much internet traffic for government surveillance. Cable and Wireless was paid millions of pounds a year for its cooperation, with the cost of running the project spiralling to £1 million a month."
Channel 4 reported that Cable and Wireless allowed Britain's spies to tap intercontinental fibre-optic cables, which come ashore on the Cornish coast. Specifically, all traffic from a cable owned by Indian telecoms company Reliance Communications were accessed and sent to the GCHQ base, according to the Channel 4 report. Top secret documents from GCHQ show it was this access point, codenamed Nigella, and run by Cable and Wireless, that allowed Britain's spies to gather the private communications of millions of internet users worldwide, Channel 4 reported.
The documents reinforce Snowden's assertion that GCHQ has "probably the most invasive network intercept program anywhere in the world". Snowden has said that GCHQ is able to collect content and metadata on every piece of internet traffic coming into and out of the UK.
The Reliance cable was still being tapped as recently as April 2013. Cable and Wireless was taken over by Vodafone in 2012, but Vodafone denied any knowledge of the intelligence agency programmes identified in the leaked GCHQ documents. The company is not able to reveal details of any current arrangements due to a legal gag, Channel 4 reported.
"Vodafone does not go beyond our legal obligations to collaborate with any security or intelligence agency in any country by opening up our networks to any form of mass observation," a Vodafone spokesperson said.
The Channel 4 News report was a joint investigation with Germany's Suddeutsche Zeitung newspaper and broadcaster WRD.
A June 2014 exposé by The Register also showed close links between Cable and Wireless, Gerontic and GCHQ.
"British national telco BT, referred to within GCHQ and the American NSA under the ultra-classified codename “REMEDY”, and Vodafone Cable (which owns the former Cable & Wireless company, aka “GERONTIC”) are the two top earners of secret GCHQ payments running into tens of millions of pounds annually," The Register reported.
GCHQ has said that all the work it has carried out is in accordance with UK law and is "authorised, necessary and proportionate".