O2 UK sale to result in breakup of payments venture Weve

UK mobile payments venture Weve could soon be broken up, as reports say the planned sale of founding partner O2 UK to Hutchison Whampoa would dismantle the existing three-year partnership.

The Financial Times reported that the two other founding partners, EE and Vodafone UK, are set to withdraw from the venture and sell any remaining assets to O2 UK. Unnamed sources told the FT that O2 would then continue to operate Weve as a wholly owned subsidiary.

A spokeswoman for Weve did not wish to comment directly on the FT report, but said she believes it to be correct that Vodafone and EE are selling to O2 UK. The other companies involved did not respond to requests for comments before publication.

Such a move would not come as a huge surprise as Vodafone UK and EE have continued to pursue their own contactless payment and NFC strategies: Vodafone has already said it intends to substantially expand its Vodafone Wallet service in the future to include services such as public transport tickets, e-tickets, contactless keys (for example to an office or hotel room) and many others.

EE's Cash on Tap contactless mobile payments service is now available on the London Underground, tram, DLR, Overground, National Rail services that accept Oyster, and on London buses.

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.

Weve had already abandoned plans to launch a mobile wallet or an NFC payment service--at least for the foreseeable future.

"Mobile payments is a fast moving technology space and there are current and future launches (from the likes of Apple and Google for example) that clearly provide the market with a range of potential solutions," the Weve spokeswoman told FierceWireless:Europe in April.

The spokeswoman added that Weve's mandate "has always been to explore new commercial opportunities in the mobile commerce arena and to build business products and services as and when it makes commercial sense to do so."

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.

The company has only recently unveiled a new commercial management team: in March, it appointed Tom Pearman as sales director, reporting to commercial director Nigel Clarkson and also joining new group heads Katie Batchelor and Keren Blackmore who were appointed from O2 Media.

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.

For more:
- see this Financial Times article (sub. req.)

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