Telstra Enhances its Technology Focus with Formation of New Software Group

Telstra - aust

Telstra has launched a new subsidiary company dedicated to driving its hundreds of millions of dollars in start-up investments.

The telecommunications giant incorporated Telstra Software Group (TSG) on August 8.

Telstra is ramping up the money and time it invests in new technology businesses around the world as the revenue from traditional sources evaporates.

Telstra global enterprise and services group executive Brendon Riley, strategic finance group managing director Cynthia Whelan and muru-D co-founder Charlotte Yarkoni are listed as its three founding directors.
TSG has been created to hold Global Applications and Platforms’ (GAP) interests “including Ooyala and muru-D” a spokesman said.

The GAP was launched in 2013 to hunt down start-up opportunities around the world. But it took more than a year for the unit to find the first start-up to buy outright.

Telstra paid an extra $US270 million ($289 million) to lift its stake in Silicon Valley-based video platform maker Ooyala from 23 per cent to 98 per cent last week.
Telstra chief executive David Thodey on Thursday said the telco had spent $500 million in the past 12 months on acquisitions in areas such as eHealth and internet video software making.

Seed funding

Telstra Software Group will also be where the company’s start-up incubator, muru-D, will park its investments.

Based out of Telstra’s Paddington telephone exchange building, muru-D offers start-ups a small amount of seed funding, space to run their businesses as well as tech support and advice, in exchange for a share of the business.

The unit’s importance was highlighted last week when Mr Thodey chose to attend muru-D’s pitch night on the same day he released Telstra’s annual financial results. Three of the start-ups got combined seed funding worth $150,000 from SYD Ventures on August 4 to help them grow.

Chief rival SingTel-Optus is also a player in the start-up space through its incubator SingTel Innov8, which has an initial fund size of $S200 million.

In 2012 it bought Australian restaurant review website for $6 million.

Analysts from firms including Gartner have said Telstra’s investments in a range of new business areas are vital for offsetting falls in fixed line phone call and text message revenue.

While the rise in mobile phone ¬revenue has helped telcos grow, the rising revenue from data downloads is not matching the huge increase in consumption being driven by smartphone and tablet usage.

Analysts have also warned that mobile growth for all telcos appears to be slowing as internet-based messaging services such as WhatsApp and Skype eat into their profits with cheap and popular products.

Where Telstra gained 739,000 mobile customers in the first half of 2014, it added just 198,000 in the second half of the year.

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