Exclusive: Vietnamese telco Viettel to launch venture capital arm

Vietnam’s state-owned network operator Viettel, also the biggest telecom company in the country, is eyeing global startups and plans to establish a venture capital fund that will potentially facilitate US startups, a top official with the firm said.

Le Dang Dung, the deputy CEO of Viettel, sees investment in startups as an inevitable fact as the business develops and the company diversifies for new growth.

“A lot of startups are using our network infrastructure to develop their products, so this is the base for partnership. We can also acquire some startups if the founders want to exit,” Dung told DEALSTREETASIA as he talked about Vietnamese tech startups.

Meanwhile, Viettel’s global investment division has proposed to launch a venture capital arm to invest startups abroad.

Most of the the global telecom biggies have operate their own venture capital units and Viettel wants to follow that path as it aims to become a global top 20 telecommunications company.

In Asia, Singapore’s listed Singtel Group set up its startup investment unit Singtel Innov8 with an initial fund size of $200 million. The fund focuses on the areas that facilitate its parent’s effective growth, including technologies and solutions that lead to quantum changes in network capabilities, next generation devices, digital content services and enablers to enhance customer experience.

“Innov8 is part of the Singtel Group’s journey to transform itself from a traditional telecommunications provider to become a leading multimedia and ICT solutions provider,” Singtel had said in a release about the VC fund.

It looks like what Viettel is going to be following its footsteps.

“The expansion into other verticals is an inevitable trend. Once the telecom network has grown to a certain stage, if the operator does not provide other services and develop content, it cannot grow further,” Dung said.

The robust local startups scene will be the driver for Viettel to create new ICT products based on its network infrastructure, such as search engines, social networks, e-commerce or e-healthcare.

Viettel is aiming to create a platform for people to interact and provide their products and services to each other, where the company is involved as the organiser of an app store or marketplace, the deputy CEO revealed.

Telco -backed VCs

Setting up a corporate venture capital arm has been typical trend among technology companies. Intel, for instance, raised the $1.28 billion Intel Capital investment vehicle, having funded 693 companies so far, according to Crunchbase. Founded in 1991, the VC firm is looking to sell $1 billion worth of assets in its portfolio.

Other names include Cisco Investments, Qualcomm Ventures and IBM Venture Capital. The two latter was exposed to the Vietnamese startup space in a Vietnam-US innovation conference in March.

Also read: Vietnam’s FPT Corporation kicks off accelerator & VC arm with $3m seed fund

In Vietnam, privately owned tech and telecom group FPT also introduced its FPT Ventures subsidiary last year.

Other regional example of telco-backed VCs includes Indonesia’s Telkom with its Metra Digital Innovation Ventures, which has said to have earmarked $25 million to invest in 10 startups this year; and Telenor Myanmar which has its own accelerator programme. Globally, Nordic telecom group Telenor runs Televenture Capital AS, which is managing seven unit funds.

Also read:

Telkom’s MDI Ventures to invest $25m in 10 Indonesian startups in 2016

Telenor Myanmar to invest $100k in two tech startups

Meanwhile, the carriers can partner with tech firms instead of establishing their own funds. Qatar’s Ooredoo, formerly QTel, is an example, in 2014 forming the Asia Internet Holding joint venture with German incubator Rocket Internet to funnel capital into the e-commerce sector. Rocket’s Africa Internet Holding is also backed by telecom firms.

What the future holds

While seeking for new opportunities in the tech startup space, the Viettel deputy CEO is still positive about telecom trends.

In emerging countries with low GDP per capita (below $1,000), there is a huge opportunity to quickly universalise internet to the entire population in response to increasing low-cost smartphones and competitively-priced mobile broadband internet.

In developing countries with medium GDP per capita ($1,000–5,000), ICT is being quickly applied into every aspect of life, while countries with high GDP per capita will begin the trend of IoT.

In addition to that, developing 4G technology in emerging markets like Vietnam is critical but still very early. “It is the infrastructure for the development of the IoT as it is highly applicable in many critical fields including healthcare, education, e-government etc,” Dung said.

Overseas markets that Viettel operates, such as Cambodia, Laos, Tanzania and Burundi, have access to these technologies before the home market in Vietnam. “We consider 4G technology as a key factor for the upcoming stages of development in overseas markets,” he said.

Also read: Vietnam state-owned Viettel bets on global reach via M&A or telecom licence route