Telefonica sells off Manx Telecom testbed

Telefonica, the owner of the UK's O2 mobile network, has sold its majority stake in Manx Telecom to a private equity firm.

The £158.8m deal was announced on Friday by the new owner of the majority stake, HgCapital, which said in a statement that the acquisition should be cleared by the end of June. The takeover was assisted by CPS Partners, a specialist international telecoms management company, the private equity firm said.

"We are delighted that HgCapital and CPS Partners have chosen to make this significant investment in Manx Telecom, and in the Manx economy," Manx Telecom managing director Chris Hall said in the statement. "This is a huge endorsement of our track record in building a world-class company and a vote of confidence in the future of the business."

Isle of Man-based Manx Telecom, which employs 300 people, has frequently been used by Telefonica as its testbed for new technologies such as 3G and high-speed downlink packet access (HSDPA), the enhanced version of 3G. However, Telefonica also tests technologies in Spain and elsewhere, and it will continue to do so at those facilities, O2 told ZDNet UK.

"Telefonica will test its technologies at diverse locations around the world — our research and development wing has grown to become a network of centres of technological excellence that stretches far beyond the Spanish borders, extending its R&D activities to offices situated in Barcelona, Granada, Huesca, Madrid, Valladolid, Slough, Ireland, Czech Republic, São Paulo and Mexico," a company spokesperson said.

The latest IT systems used by mobile operators make it possible for them to roll out new services in a matter of weeks, rather than requiring a year to 18 months of testing, according to Ovum analyst Mark Giles.

"One of the reasons they have sold [Manx Telecom] is perhaps because these next-generation IT systems enable telcos to cut the time-to-market for services drastically," Giles said. "A lot of telcos are adopting a scattergun approach to innovation, where they can launch services very quickly."

O2 said Manx Telecom is being sold because it is a "non-core" asset and Telefonica is focusing its resources into "main large markets", concentrating on developing its Movistar and O2 brands.

Telefonica has recently rebranded its operators in Spain and a few other countries as Movistar, Giles noted. He added that like most operators, the company is likely to need the money right now for rolling out next-generation mobile networks.