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Vodafone Group chief executive Vittorio Colao has poured cold water on Telstra and other major companies that invest in start-ups and venture capital funds to grow profits.
British-based Vodafone Group owns half of Vodafone Hutchison Australia and is the world's second-biggest telecommunications company behind China Mobile with more than 446 million subscribers.
Its global chief executive Vittorio Colao told Fairfax Media in a rare interview, that the best start-up businesses were actually hindered when established companies tried to invest in them.
The comments come as Telstra ramps up its investments in innovation and start-ups around the world. It has opened
Telstra chief executive Andy Penn has declared he wants Australia's biggest phone and internet provider to become a world-class technology company.
"I'm a bit sceptical of telcos or any large ventures doing this because if you're a good, young and creative entrepeneur I'm not sure you need too much of a big corporate [backer]," Mr Colao said. "Google is the only exception and they are very successful, but they are successful because they have the competency and the scientific and analytical capabilities that are unique in the world.
"But outside of Google I haven't seen many examples of these companies being successful and as soon as they do you have this conflict with the mother company and different rules and different ways of working."
Vodafone Group itself opened a venture capital arm called Vodafone Ventures and start-up hubs from 2011 in an effort to grow profits.
But it moved its main start-up hub from Silicon Valley to London in 2014 and has not generated substantial returns from the investments.
"We closed it essentially [although] we made money off it, ironically," he said. "Every single intelligent start-up that comes to Vodafone wants to have market access … and that I can do without making an investment.
"Vodafone invested maybe £80 million to £100 million [$163 million to $204 million] in this and we made some money, but it was not really changing the nature of the company."
Mr Colao did, however, wish Telstra the best of luck and said he did not want to pass judgement on their strategy.
"I've met some of the companies where Telstra has invested in and they're good companies so I'm not saying it's a bad thing, but then what's the point? One out of ten will do well and Telstra will still be the same company as before.
"Now, if they get the next Google I will be wrong and they will be geniuses."
He also flagged a review of Vodafone Group's stake in its Australian operations once the company hit key cash flow targets.
"We're really focused on the turnaround of the company," Mr Colao told Fairfax Media.
"One day something will happen and we will sit down like good partners and discuss it."
He declined to provide the specific targets, but said they revolved around Vodafone Australia's cash flow generation and success in new business divisions including rural and fixed-line operations.
"Once you start seeing that then the corporate events of Vodafone, Hutchison Whampoa and the market will determine what is the best thing," he said.