Telefonica is set to acquire UK geolocation data startup Statiq for $4.2 million, sources say (TEF)

Spanish telecoms company Telefonica is in talks to acquire the British mobile geolocation data startup Statiq for $4.2 million (£3.5 million), according to multiple industry sources.

Not all the paperwork has been signed but deal is likely to be announced as soon as this month once all the legal checks have taken place, the sources say.

Statiq processes "billions" of location data signals to identify the places people visit and build consumer profiles. That data allows advertisers to better target ads based on a user's physical location and also measure whether they visited a retail store after seeing a mobile ad.

Both companies acknowledged Business Insider's multiple requests for comment but declined to offer statements.

Statiq was founded in 2013 by Tim Finn, Ilya Kazansky, and Dean Cussell — all former employees of StrikeAd, a programmatic demand-side platform (DSP) that was acquired by Sizmek for $11.7 million in 2015.

According to Crunchbase, the company, which is headquartered in London and has offices in Kiev, has raised $750,000 in funding from angel investor Dmitri Lipnitsky.

As telecoms companies look to move beyond being a "dumb pipe," advertising provides a large potential revenue stream. This is especially so in Europe, where forthcoming changes to the European privacy regulation GDPR could limit the use of third-party data to track and target consumers without their explicit consent. Having access to first-party data puts telecoms companies — and big consumer internet platforms like Google and Facebook — in an advantageous position.

Telefonica has more than 300 million customers worldwide and has been steadily building out its advertising division. In 2014, it launched a mobile ad exchange called Axonix that allows brands to target ads at specific audiences, using anonymized segments of Telefonica's customer data.

Telefonica isn't the only telecoms company making a move into advertising in order to develop new revenue streams. Amobee, the ad tech arm of Singaporean telco Singtel, acquired the demand-side platform Turn in February this year. In the United States, Verizon acquired AOL in 2015 and the company announced its plans to acquire Yahoo last year.

Lara O'Reilly also contributed reporting.