Deutsche Telekom is reportedly looking to lead a new venture fund looking to invest in European defense firms.

Bloomberg reports that the carrier is working alongside Porsche SE, which is the billionaire Porsche-Piëch family's holding company, to set up a venture capital fund to take advantage of increased defense spending on the continent.

According to the report, the fund will be run by DTCP, the Hamburg-based investment firm and former Deutsche Telekom unit that was spun off in 2015.

Porsche SE confirmed earlier this week that it plans to expand further into the defense sector, with the firm telling investors, “against the backdrop of a changing geopolitical situation and growing security policy requirements, Porsche SE sees considerable development potential in the defense and security sector and intends to capitalize on this.”

Following Russia’s illegal invasion of Ukraine, defense spending in Europe has been on a sharp rise. Spending on defense by EU member states rose by more than 30% between 2021 and 2024, with 2024 alone reaching approximately $380 billion, about 1.9% of the bloc’s GDP.

NATO members agreed to increase spending to 5% following complaints from U.S. President Donald Trump that European allies were not contributing enough. Of that 5%, some 3.5% will focus on core military spending while the rest will go toward infrastructure and cybersecurity.

Deutsche Telekom has previously shown interest in cybersecurity investments, having backed cyberattack recovery platform developer Salvador Technologies last April via its early-stage Hubraum fund.

The carrier also works closely with the German Armed Forces (Bundeswehr) on cybersecurity defenses. Its T-Systems' business unit operates one of the largest cybersecurity defense centers in Europe. The Bonn-based facility analyzes around one billion pieces of security-relevant data, with on-site experts monitoring Deutsche Telekom systems.

Both Deutsche Telekom’s reported defense investment partners have previously worked together, with the pair launching Incharge Capital Partners in 2024 – a venture capital fund also backed by Deutsche Telekom. The pair came together to take a stake in Stuttgart-based drone developer Quantum Systems.