October 31, 2016 / 9:00 AM / 4 years ago

Vimpelcom backer takes stake in firm key to its internet strategy

LONDON, Oct 31 (Reuters) - The main financial backer of Russian mobile operator Vimpelcom is taking a stake in Qvantel, a Finnish supplier of mobile network management software, in its latest move to help Vimpelcom reinvent itself as an internet player.

L1 Technology said on Monday it is making a strategic investment for an undisclosed amount in Qvantel, which provides cloud-based, business support system (BSS) software for telecom operators to deliver internet services to mobile users.

Unlike classic venture backers seeking mainly to maximise investment returns, L1 aims to invest $2-$3 billion in mid- to late-stage tech firms that can contribute to Vimpelcom’s strategy to reinvent itself as a mobile internet player.

L1 Technology is the tech venture arm of LetterOne, the investment vehicle of Russian billionaire Mikhail Fridman. LetterOne holds a 48 percent stake in Vimpelcom, a mobile operator with over 200 million users in Russia, Italy, several Central Asian nations and Pakistan, Bangladesh and Algeria.

Amsterdam-based Vimpelcom is looking to form partnerships with internet-based players while radically down-sizing and restructuring its traditional telecoms business structure.

“We believe that the (telecom) sector needs to disrupt itself, and evolve its operating models and revenue streams before it is disrupted by others”, Alexey Reznikovich, L1 Tech’s managing partner and former Vimpelcom chairman, said in a statement.

So far this year, L1 Technology has announced a $200 million investment in mobile transport player Uber (reut.rs/2eJsltn) on the expectation this will lead to closer ties between Uber and Vimpelcom in markets the operator serves.

L1 also made a $50 million investment in U.S.-based FreedomPop, a mobile network operator which offers voice and data services to customers free of calling charges, while making money from follow-on premium services. (reut.rs/2e1GIoM)

Qvantel is a two-decade-old Helsinki-based firm which earlier this year struck a deal with Swedish mobile network equipment giant Ericsson to embed the Finnish firm’s product into Ericsson’s broader BSS offering for telecom operators.

In June, Vimpelcom announced a $1 billion partnership with Ericsson to overhaul Vimpelcom’s technology infrastructure, a deal in which Qvantel plays a key part.

BSS software functions as the operating system for mobile networks, allowing operators to analyse voice, text and video traffic data, customer usage and billing information to manage mobile services for users. (Editing by Alexandra Hudson)

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