Why Telcos Are Looking At Tech Startups To Ensure Their Future

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Corporate Venture capital (CVC) investments have more than tripled in emerging markets in the last five years as more and more mobile operators invest in start-ups to aid their acceleration, according to a report.

The report entitled Corporate venture capital: an opportunity for mobile operators and start-ups in emerging markets has highlighted how the rise in CVC investments accounts for over 30% of venture investments, which has risen by 10% from 2012. 

Co-written by advisory and investment company, Delta Partners and GSMA Ecosystem Accelerator, the report has also noted that the digital revolution is having a huge impact on the telecoms sector.

With the blurring of the boundaries between traditional telecoms and media, mobile operators are realising that collaborations with technology start-ups are essential if they want to grow and remain competitive in a world where digital disruption dominates, it said.

Whilst ongoing efforts to revamp the sector have often been concentrated in developed markets, mobile operators in emerging markets are also trying to catch up, said the report.

“The digital era has raised the bar and it’s vital that mobile operators in emerging markets take heed of the opportunities represented by start-ups to avoid being left behind,” said Nuno Goncalves Pedro, a partner at Delta Partners who co-authored the report.

“Mobile operators in emerging markets should be more active in their support of the start-up ecosystem, in particular those start-ups that are local to them,” Pedro said.

The study has also outlined how benefits are already being reaped by some companies which have made successful collaborations in this space.For example, digital players such as

For example, digital players such as Jumia (founded by Rocket Internet) based in Africa, have been successful in soliciting investments from the mobile operators such as Millicom, MTN and Orange.

The injection of cash funding has also helped drive Jumia’s business forward with collaborations around joint marketing, cross-promotion and selling.

“Mobile operators have a great set of tools at their disposal, which will also see them gain from partnerships with start-ups to evolve their business models,” Pedro added.