Bloomberg News

Vodafone, U.K. Operators, Form Mobile Payment Joint Venture

June 16, 2011

(Updates with comment from Telefonica in fourth paragraph.)

June 16 (Bloomberg) -- Vodafone Group Plc and other wireless operators agreed to create a common platform for mobile payment systems to speed up the development of additional services in the U.K.

Vodafone, Telefonica SA, and Everything Everywhere, the partnership between France Telecom SA and Deutsche Telekom AG, will form a joint venture to help banks and advertisers access the service, which will let people buy items from groceries to clothes with a swipe of their smartphone, they said in a statement today.

The operators, who lost the battle for online application stores to Apple Inc. and Google Inc., are scrambling to drive revenue from additional services and boost smartphone sales. Near-field communications payments may account for one-third of the $1.13 trillion global market in mobile transactions by 2014, according to IE Market Research.

“The mobile marketing and payments market is extremely fragmented,” Telefonica U.K. Chief Executive Officer Ronan Dunne said in the statement. “By creating this new business we will underpin this nascent market, providing real size and scale.”

Companies using the service will be able to provide coupons and other offers to consumers, according to the statement. Orange last month started the first national NFC service in the U.K. and is considering offering film tickets through the service as well as loyalty points from retailers.

Swipe Handsets

The venture may accelerate the introduction of handsets with near-field communications swipe technology, according to Vodafone U.K. CEO Guy Laurence. Handset manufacturers “have been looking for somebody to put their hand up and say yes we do want to embrace NFC in a big way.” The number of handsets with the standard currently available is still low, he said on a conference call.

In the U.S. Google is competing with operators including AT&T Inc. and Verizon Wireless with a rival mobile-payment system. The company plans to roll out the system in five U.S. cities including New York and San Francisco.

The U.K. operators will need to set out the smartphone standard used for mobile payments and SIM cards after gaining regulatory clearance. The new company is scheduled to start at the end of this year.

Hutchison Whampoa Ltd.’s Three unit said it was “more than a little concerned that -- as a core competitor -- we have been excluded from this joint venture.”

Vodafone said the service will be open to all parties.

“Not everybody needs to be a shareholder to take advantage of the services,” Laurence said. “It’s open to everyone. If Google wants to take advantage of these services they can.”

--Editors: Robert Valpuesta, Simon Thiel.

To contact the reporter on this story: Jonathan Browning in London jbrowning9@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net


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