Deutsche Telekom sets up VC fund amid questions over future government shareholding

Deutsche Telekom is setting up what it claims is one of Europe's largest investment funds, with an eye to boosting German start-ups, as reports emerge suggesting the German state will sell its stake in the operator.

The German incumbent said Deutsche Telekom Capital Partners (DTCP) will help it increase its investment in technology start ups when it goes live in 2015. The venture capital business will have a pot of €500 million ($623 million) to invest over a five year period, and will be tasked with seeking out the rising stars of Germany's start-up scene and fostering operational cooperation between over-the-top companies and Deutsche Telekom.

DTCP will also advise Deutsche Telekom on its existing investments in ISP Strato, Interactive Media, Scout, Deutsche Telekom Innovation Pool (TIP) and T-Venture.

Deutsche Telekom, however, will close new investments by T-Venture, the funding arm it set up in 1997, and which counts Ruckus Wireless and Demandware among its recent successful exits. T-Venture, however, will continue to manage its existing investments in approximately 100 companies, according to Deutsche Telekom.

The operator's launch of the new VC arm coincides with questions over its own shareholding structure. The German government, which holds a 31.7 per cent stake in Deutsche Telekom--14.3 per cent of which is held directly and 17.4 per cent indirectly via the state bank KfW-- is weighing up a sell-off of its Deutsche Telekom shares, Reuters reported.

A German government document signed by finance minister Wolfgang Schaeuble calls for a sale of Deutsche Telekom shares to be "carefully examined", the news agency added

This latest move follows a recommendation last year by the German monopolies commission for a sale of government shares in Deutsche Telekom, which Reuters states are worth over €17 billion in total.

For more:
- see Deutsche Telekom's press release
- view this Reuters article

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