Telefónica and Blackstone Team up on Mobile-Ad Venture

London-based Axonix UK Will Sell Mobile ads in the U.S., Europe and Latin America

By Lisa Fleischer and Christopher Bjork

April 15, 2014

Spanish telecom giant Telefónica SA is teaming up with an arm of private-equity powerhouse Blackstone Group in a mobile-advertising venture the two hope will someday challenge companies like Google Inc. in gathering data over mobile phones and selling targeted ads.

The new company, London-based Axonix UK Ltd., will sell mobile ads in the U.S., Europe and Latin America, targeting phone users based on their location, browsing habits and interests.

"We are absolutely going to be challenging Google and Twitter and Facebook, because that's the industry that we want to play in," said Simon Birkenhead, the new chief executive of Axonix, who moves from his previous position as Telefónica's director of global advertising sales.

Telefónica is venturing into a space that some see as ripe for telecom companies, who have yet to fully take advantage of the massive amounts of data running over their networks. "They've got huge amounts of data about their consumers," said Julie Langley, partner at corporate financial consultants Results International.

Telefónica, the leading cellphone provider in Spain and Latin America, has large operations in the U.K. and Germany, offering a potentially huge audience to companies looking to advertise. The new ad company could also work with other telecoms to sell advertising over their networks, Mr. Birkenhead said.

Telefónica has a long history of investing in Internet companies and other technology-related ventures, but a mixed record of success. It lost billions on an ill-timed acquisition of web portal and search engine Lycos just before the dot-com bubble burst. Lately, it has put significant resources into Wayra, a technology startup accelerator that has invested in some 300 projects in Europe and Latin America.

Axonix is a rebranding of mobile ad company Mobclix, which was bought last year by Blackstone unit GSO Capital Partners after its parent company filed for bankruptcy. The terms of the partnership with Telefónica weren't disclosed, but Mr. Birkenhead said capital provided would be sufficient to fund the company for at least two years.

For years, ads shepherded to mobile devices by telecom companies have been fairly basic, such as text-message offers from nearby merchants. Axonix aims to follow people wherever they are, whether that means displaying a message in an app on a phone in someone's hand, to customizing a billboard in front of them, Mr. Birkenhead said. Axonix would follow various countries' regulations regarding whether consumers have to opt-in to have their data used, Mr. Birkenhead said.