August 30, 2016 / 10:31 AM / 4 years ago

Fridman's LetterOne invests in mobile challenger FreedomPop

FRANKFURT (Reuters) - FreedomPop, a U.S. startup challenging the mobile industry by offering free voice and data plans, has received a $50 million investment to fund international expansion from LetterOne, the investment vehicle owned by Russian billionaire Mikhail Fridman.

File photo of Mikhail Fridman speaking during a news conference in Moscow, June 16, 2008.

Luxembourg-based LetterOne (L1) said on Tuesday it had received national security clearance from the U.S. Committee on Foreign Investment in the United States (CFIUS) to complete the $50 million investment.

FreedomPop announced the investment earlier this year but did not reveal the identity of the investor.

FreedomPop, founded five years ago in Los Angeles, supplies voice and data services for mobile users by leasing wholesale network capacity from established mobile network providers such as Sprint (S.N) and Hutchison’s Three UK.

The company offers packages of voice calling minutes, text messages and data plans of around 200 megabytes free of charge, making money when consumers use up their free capacity and by charging for add-on services.

FreedomPop offers mobile voice and data services in the United States, Britain, and Spain. It now plans to enter eight more countries by the end of next year, followed by a fast roll-out across Asia, Europe and Latin America. 

The company has introduced a variety of novel offers to the telecom industry including a low-cost Wi-Fi calling and data service across the United States and offers that give callers free access to WhatsApp in 30 countries.

LetterOne will help forge strategic partnerships in emerging markets for FreedomPop, the investor said. It seeks to fund late-stage high-growth Internet companies and announced a $200 million investment in Uber [UBER.UL] earlier this year.

L1 Senior Partner Mustafa Kiral will join FreedomPop’s board of directors. He previously oversaw mergers and acquisitions at Altimo, the telecom investment arm of Fridman, including a joint venture between Russia’s Vimpelcom VIP.O and Wind Italy.

FreedomPop has raised around $109 million to date from a variety of top-tier Silicon Valley and European venture funds, along with Malaysian telecoms conglomerate Axiata Group (AXIA.KL).

Reporting By Eric Auchard; Editing by Adrian Croft

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