Telefnica, the Spanish mobile operator, will on Monday announce a EU40m venture capital fund to invest in new technology companies.
The move is aimed at giving Telefnica access to new technologies for mobile phones and the internet.
The company has already made three investments and is aiming to have 10 to 12 companies in its portfolio by the end of the year.
The three investments include a holding in Amobee, a mobile advertising specialist in which Vodafone has also taken a stake. Amobee is working with Vodafone in Italy to launch ad-supported mobile video services.
The Telefnica fund has also taken a stake in GestureTek, which makes gesture-recognition software, and Kyte, a specialist in social networking.
"The focus of the innovation agenda is to help the company find new revenue streams and ways to differentiate the customer experience. Although a financial return is important, the main focal point is to find companies who have a strategic fit with Telefnica in key areas of potential future growth," said Russ Shaw, director of innovation at Telefnica.
Mobile phone operators such as Telefnica are looking at offering new mobile services such as music, games and navigation to generate additional revenue to compensate for the falling price of voice calls.
Telefnica is not the first mobile company to start a venture fund. Vodafone established its Vodafone Ventures VC fund in 2000, while Deutsche Telekom, the parent company of T-Mobile, has run the T-Mobile Venture Fund since 2001. Orange, the mobile arm of France Telecom, established a venture fund in 2000, but transferred management in 2004.
Motorola, the handset manufacturer also has a ventures arm and its Finnish rival Nokia has launched two - Nokia Venture Partners in 1998, now rebranded as BlueRun Ventures, and the Nokia Growth Fund launched in 2004.
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