O2 sale to break up telecom advertising partnership

A high profile three-year shared attempt by British telecoms groups to break into the lucrative mobile advertising market will come to an end with the buyout of O2, one of its founding partners.

Set up in 2013, Weve collects the data from more than 20m mobile customers of Vodafone, EE and O2, allowing it to target advertising to specific groups and locations. The group also launched mobile money services and loyalty schemes using customers' smartphones.

The group's creation came after a lengthy fight to secure antitrust approval from Brussels competition authorities as rivals argued that the combined resources of the three telecoms groups would prove unfairly strong.

The company's start-up costs were covered with an investment of almost £40m by the three operators who hoped it would allow them to compete in a sector dominated by US technology groups such as Google, Facebook and Twitter.

However, just three years later Vodafone and EE are set to withdraw from the venture and sell what is left to O2, which is being bought by Hutchison Whampoa for £10.5bn, according to people familiar with the matter.

O2 will continue to operate Weve as a wholly owned subsidiary, according to a person close to the talks. O2 will still offer access to its mobile contract customers, 6m customers from its Priority Moments scheme and 14m customers using O2 WiFi.

The other two groups will focus on their own mobile payments and market platforms

O2 declined to comment. EE and Vodafone were not immediately available for comment.

The move is a symptom of the difficulties that mobile groups have faced in breaking in to the rapidly growing world of mobile advertising. Weve has also had to abort an attempt to launch a mobile money service in the face of steep competition from rival services launched by banks and technology groups such as Apple. 

On paper, mobile groups should have an advantage because they already hold so much data on their customers from names, ages and addresses to browsing histories and real-time location tracking.

By bringing the customers of Vodafone, EE and O2 together, Weve was able to draw on anonymised customer details for more than 21m people, which represents a valuable market for targeted advertising.

Weve has been behind a number of national advertising campaigns that show this in operation. It worked with Tesco to send out targeted text messages to customers in certain store catchments.

Most recently, Weve worked with the Electoral Commission to send out messages to the smartphones of people aged 18-25 to encourage them to register to vote.

More than 200 brands used the messaging platform in the fourth quarter of 2013 and more than 60 per cent of those campaigns used its location services to pinpoint their campaigns.

However, Weve made a loss in its first year of about £25m on revenues of about £13m. Most of its sales came from text-based advertising messaging with offers for customers. It employs about 90 people.

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