Sources inform ''Globes'' that Spanish telecommunications giant Telefónica SA (NYSE; IBEX: TEF; LSE: TDE; DAX: TNE5; TSE: 9481) is due to set up a start up incubator in Israel. The company has a positive history in Israel, including a good return on its investment in Amobee Inc., which was sold a few weeks ago for over $300 million.
In late 2009, Telefonica acquired online telephony services provider Jajah, which became the basis for the company's Israeli R&D center. It has also made other investments and collaborations in the country.
The sources said that Telefonica executives are currently holding a series of meetings in Israel for the establishment of the incubator, on the basis of accelerator programs in the US, and which are now spreading to Israel. Telefonica's collaborators in Israel include Amdocs Ltd. (NYSE: DOX) and several telecommunications start-ups.
Telefonica is the world's third-largest telecommunications carrier, with 306 million subscribers, two-thirds of whom are in Latin America. Three-quarters of the company's subscribers are mobile subscribers. Headquartered in Madrid, it is now expanding to Eastern Europe. It reported a net profit of €5.4 billion on €62 million in 2011.
Telefonica already has an incubator program, Wayra, in Spain and seven Latin American countries. Last month, it launched Wayra in the UK, and Israel is apparently the next target. Telefonica's objective in making large investments in innovation is to get access to digital technologies, which are the industry's growth opportunities. The incubators will answer to Telefónica Digital, which handled the acquisition of Jajah.
Telefonica's terms for Wayra are interesting, but may not suit every company. It invests up to €50,000 in companies, and provides a six-month program that includes training, office services, and technical support, as well as an option to distribute the product among Telefonica's subscribers. Telefonica is interested in internet and mobile services providers.
However, UK media reports that Telefonica wants a 10% stake in the companies in exchange for its investment, as well as first rights to future investments and product distribution. While Telefonica says that it does not want exclusivity in product distribution, which would enable it to expand its market and sell to competitors, it is hard to avoid the impression that when the process is over, a start-up will be identified with Telefonica.
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2012
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