France Telecom to invest in digital

13 March 2012 | Kavit Majithia

France Telecom-Orange and French communications company Publicis Groupe have announced an investment partnership deal with Iris Capital Management to venture into the technology sector.

The French operator says the deal will create one of Europe’s largest venture capital investors, with France Telecom and Publicis Groupe making a joint investment of €150 million in Iris. It is the operator’s latest attempt to cash in on the growing technology sector and its project will be further aided through funding agreements from the European Investment Fund and CDC Enterprises. Together, the three funds provide total capital worth over €300 million, with an investment focus specifically on established companies within France and the wider continent, start-up companies outside Europe and early-stage investments to young companies.

“This joint initiative with Publicis Groupe and Iris is a pioneer in its field,” said Stéphane Richard, chairman and CEO at France Telecom-Orange. It complements Orange’s considerable effort in terms of research and development, and it will encourage the emergence of future leaders of the digital economy by bringing them funds at several stages of their development.”

Large telecoms operators have come under scrutiny by market watchers, and by investors, for not taking full of advantage of the data revolution in the industry, often criticised for being too rigid to adapt to changes in technology. Spanish operator Télefonica, one of France Telecom’s biggest rivals in Europe, set up a separate digital division to make investments in the space in Latin America and Europe last year, while Deutsche Telekom has established a large cable TV business in Germany.

France Telecom and Publicis Groupe first outlined plans for investments in digital late last year, and both companies will acquire a 24.5% stake in Iris each. Iris has made investments of €870 million in 200 companies since its launch over 20 years ago, with a large portfolio of digital innovation companies, including online monetisation games platform Mediastay and Belgian search engine firm Searchmetrics.

“This is an exceptional opportunity for a European venture player,” said Antoine Garrigues, managing partner at Iris. “The financial contribution and value add that France Telecom and Publicis Groupe will bring to this initiative will considerably reinforce our ability to accompany budding companies in the digital economy.”