O2 UK buys mobile payments venture Weve from Vodafone UK and EE

O2 UK has acquired all shares in UK mobile payments venture Weve, confirming reports from Monday that founding partners EE and Vodafone UK planned to exit the venture.

In a statement sent to FierceWireless:Europe, Weve and O2 said the acquisition came after strategic review of the company, which will now trade as a wholly owned subsidiary of O2 UK. The financial details of the deal were not revealed.

Earlier reports had suggested that the move by EE and Vodafone UK to sell their respective one-third shareholdings and dismantle the three-year-old partnership was sparked by the planned sale of O2 UK to Hutchison Whampoa.

David Plum, digital director for O2 UK's current parent company Telefónica UK, said Weve would be better and faster "with only one owner to answer to" and would benefit from an additional 20 million opt-ins through O2 WiFi and O2 Priority.

"By focusing on mobile advertising Weve has been really successful, growing by 45 per cent year on year in 2014. The UK mobile digital advertising market is big, growing by almost 100 per cent year on year to £850 million in 2014," Plum commented.

Vodafone UK and EE's exit from Weve did not come as a big surprise, as both companies have continued to pursue their own contactless payment and NFC strategies.

What's more, many companies have been forced to reposition themselves following the launch of competing services such as Apple Pay and Google Wallet and the growing interest of banks in host card emulation (HCE). These applications leave mobile operators out of the value chain as the SIM is no longer relied on as the secure element.

In Denmark, for example, TDC, Telenor, Telia and Three Denmark sold their mobile payments venture Paii to a rival company owned by banks, conceding that payment activities are perhaps more suited to financial institutions than telecoms service providers.

In the U.S., Google bought Softcard, the mobile payments joint venture backed by Verizon Wireless, AT&T Mobility and T-Mobile US.

First established as" Project Oscar" by its three mobile network partners, Weve has built what it describes as the UK's only platform for mobile messaging and display advertising powered by first-party data at scale. "Weve has been running mobile marketing and advertising campaigns for almost three years and has been successful in growing revenues and attracting new advertisers," the company said.

Weve posted a loss of around £25 million (€33.9 million/$38 million) in its first financial year to Dec. 31, 2013. It had received almost £38 million from its owners to cover its launch costs.

Telefónica agreed in March this year to sell its O2 UK business to Hutchison Whampoa for £10.25 billion. The two companies are now seeking regulatory clearance for the deal, which would see O2 UK merge with rival operator Three UK.

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