PT Telkom Indonesia Tbk (IDX: TLKM) will channel funds up to US$500 million to its venture capital unit, PT MDI Ventures, in order to strengthen digital capabilities, the director told TheInsiderStories - Photo by MDI Ventures

JAKARTA (TheInsiderStories) – Indonesia’ largest telecom provider, PT Telkom Indonesia Tbk (IDX: TLKM) will channel funds up to US$500 million to its venture capital (VC) unit, PT MDI Ventures, in order to strengthen digital capabilities, the director told TheInsiderStories. The company aimed to investing in the digital industry is experiencing business growth and valuations are increasing rapidly.

Since 2016, the state-owned telco firm has invested $100 million in the subsidiary. Strategic portfolio director at TLKM, Achmad Sugiarto stated, the decision has been taken to realize its commitment to transform into a digital telecommunications company. Telkom has launched a business direction that focuses on three pillars namely digital connectivity, digital platforms, and digital services.

Until now MDI Ventures has invested in 38 companies from 12 countries and has contributed significantly to the digital transformation of TelkomGroup. He stated, “Through strengthening digital capabilities and allocating investment in line with the direction of business going forward, it is expected that company performance can grow sustainably.”

Beside, venture capital, Telkom also wants to increases its Pay TV businesses through IndiHome. In 2019, the number of customers of the fixed broadband business reaches seven million subscriber with revenue growth of 48 percent. The service available in 489 of 514 cities and districts in Indonesia. In this year, IndiHome targeting to have 8.3 million customers and revenue growth of up to 20 percent compared to last year.

Last year, its other VC armed, PT Telkomsel Mitra Inovasi (TMI) and MDI Ventures, get fresh funding of $40 million from its parent. The funds use for its business by funding new startups until the end of 2019.

According CEO of MTI, Andi Kristianto, with the new injection, the new company would look for startups that already had traction and seemed to be able to synergize with assets owned by PT Telekomunikasi Selular (Telkomsel). After get fresh funding from its holding, both companies injected undisclosed amount of funds to a strategic investment-based company funded PT Finaccel Teknologi Indonesia or popular with brand Kredivo.

In early 2019, both companies had also made initial funding to Kredivo with total amount $30 million. Kredivo is a startup with innovative products in the form of new alternative digital payment methods, with a variety of methods and payment terms for buyers. Kredivo has been helping payment transactions for major players in e-commerce such as Tokopedia, BukaLapak, Shopee, and Moka’ online cashier system.

In addition to Kredivo, Kristianto admitted, TMI did not set the number of startups that will be funded this year, but certainly the fund manager will see the opportunities. So far, TMI collaborated with MDI Ventures, its holding, and Singapore-based Singtel Innov8.

In investing, there are several startup criteria that are used as references by MDI Ventures, including having high future value and positive synergy value for TelkomGroup product development.

Recently, TMI with MDI Ventures injected $4 million in the first round of its ongoing Series C investment in Anchanto, a Singapore headquartered pan-Asia SaaS technology company. MDI Ventures’ funding comes after Series B funding from Japan’ Transcosmos Inc., and Singapore’ Luxasia Group in May 2017.

Latest investment in in United States-based internet of things startup Roambee’ Series B1 funding round worth of US$15.2 million led by Anchor Group, a Swiss-based investment firm, and Comcraft, a global investment group. The Roambee series also included investments from Intuitive Ventures, logistics conglomerate Jebsen & Jessen, and industrialist Anant Singhania.

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