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The companies will offer a range of communications security products and services for mobile phones and tablet devices initially, with the partnership the first of its kind, BAE's chief executive, Ian King, said in a statement.
BAE, Europe's largest defence contractor, is looking for growth in its cyber and security arm, BAE Systems Detica, particularly in areas such as communications technology.
The first part of the agreement will see the launch of a new cloud-based mobile security solution this spring for Vodafone's 1,500 largest corporate clients.
Reporting by Lorraine Turner; Editing by Helen Massy-Beresford