Indonesian telcos have dived headfirst into the startup world. Who’s doing it best?

Indonesia has three major mobile phone carriers that are in fierce competition with each other: Telkomsel, Indosat and XL Axiata. Together, they dominate the market, with Telkomsel owning by far the largest slice of the pie, followed by Indosat and then XL Axiata.

The major source of revenue for these telcos right now is data subscriptions. But on a long term trajectory, the cost of data will decrease, providing fewer revenue opportunities for mobile carriers. This is why mobile carriers have been getting increasingly active in digital content, digital services, and the tech startup scene.

Telkomsel

Telkomsel is a subsidiary of state-owned telco Telkom. It first entered the startup world in 2012 with the inception of Bandung Digital Valley, a startup space that’s part of Telkom’s R&D center in Bandung. This became home to Telkom’s incubation program, Indigo Incubator.

in 2013, a similar space was created in the city of Yogyakarta.

The incubation programs in these “digital valleys” were at first rather low-key, until in August 2014, Telkom entered a cooperation with VC firm Fenox to spruce things up. Together, they pledged a US$200 million fund to invest in tech startups.
(Disclosure: Fenox VC is also an investor in Tech in Asia. See our ethics page for more information).

Out of this collaboration grew Telkom’s accelerator program, which is often referred to as DDB Accelerator, the DDB standing for Divisi Digital Business (digital business division). Some of the startups in the accelerator program are from Telkom’s own incubator, but outside startups are also accepted.

(Update 5/27/15: Nicko Widjaia, program lead at Telkom’s Indigo Incubator and former venture partner at Fenox VC, reached out to make an important clarification. According to him, the collaboration between Telkom and Fenox never actually materialized, despite receiving media attention. It’s unclear whether this means the US$200 million fund ever truly existed. Tech in Asia is seeking further comment.)

(Update 5/28/15: In a statement to Tech in Asia Nicko Widjaya said that a corporate venture capital fund continues to exist under Metra Digital Innovation (MDI), a subsidiary of Telkom Metra, the Group’s sub-holding company), but that no other partners are involved in it as of now. Widjaja also said that no collaboration occurred with Fenox in Telkom’s incubator or accelerator program.)

Companies in its portfolio include ecommerce shop-builder Jarvis Store, e-health platform UDoctor, and B2B video conferencing app Umeetme

After opening registrations in March, DDB accelerator is holding a large pitching event tomorrow that will decide which startups are admitted to its second batch.

Summary