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January 16, 2024

Vodafone inks new digital alliance with Microsoft

The agreement will also see Vodafone commit to Azure as its cloud provider and help the UK telecommunications giant scale its new IoT arm.

By Greg Noone

Vodafone and Microsoft have announced a new ten-year partnership aimed at scaling the former’s digital platforms. The collaboration will see the UK multinational telco invest $1.5bn into cloud and customer-focused AI services supplied by Microsoft, the former said in a statement released this morning. In exchange, Microsoft will make use of Vodafone’s mobile and fixed connectivity services and invest in the latter’s IoT connectivity platform, due to be spun off into a separate business in April 2024. 

“This new generation of AI will unlock massive new opportunities for every organisation and every industry around the world,” said Microsoft’s chief executive, Satya Nadella. “We are delighted that together with Vodafone we will apply the latest cloud and AI technology to enhance the customer experience of hundreds of millions of people and businesses across Africa and Europe, build new products and services, and accelerate the company’s transition to the cloud.”

A shop sign for a Vodafone mobile store, used to illustrate a story about the telco's new partnership with Microsoft.
Vodafone has announced a new, all-encompassing digital alliance with Microsoft set to bring generative AI to the heart of its business, less than a year after it announced almost 11,000 redundancies. (Photo by multitel/Shutterstock)

Vodafone reveals new commitment to Microsoft Azure

The new partnership will commit Vodafone to receiving cloud services from Microsoft Azure, bookending a series of deals it struck with several of Redmond’s rivals over the past decade, including Google Cloud and Oracle. Consequently, said the telecommunications firm, it would now jettison several of its physical data centres in favour of virtual equivalents across Azure’s European facilities. The deal will also see Vodafone “extend its commitment to distributing Microsoft services”, including security solutions, Azure and Teams, as part of its strategy to become Europe’s leading enterprise telco. 

Vodafone added that its new commitment to receiving cloud services from Azure would also help it to scale M-Pesa, its Africa-based mobile payment platform. In Europe, meanwhile, the telecommunications company claimed that its new partnership with Microsoft would allow it to more easily leverage generative AI models throughout its interactions with customers, in addition to deploying Microsoft Copilot at a greater scale internally. 

Microsoft-funded boost to Vodafone’s IoT ambitions

Microsoft will also invest heavily in Vodafone’s IoT platform, which the latter claims already connects 175 million devices worldwide. This business will also be connected to Azure’s cloud ecosystem which, Vodafone claims, will make it available “to a vast developer and third-party community using open APIs”. 

The deal is likely an astute move from Microsoft, explains Jason Wong, Gartner’s lead analyst on the company. “Microsoft’s investment in Vodafone’s IoT platform supports the ongoing pivot of their immersive tech investments to the ‘industrial metaverse’ to support frontline workers,” says Wong. “Microsoft could also gain rich data signals from Vodafone’s 175 million connected devices globally, especially to support Microsoft’s threat intelligence capabilities. Vodafone’s intentions to open the Azure-based platform to developers and third-party communities could [also] accelerate Microsoft’s generative AI expansion in Europe and important emerging markets in Africa.”

Its announcement of a new partnership with Microsoft follows a tough year for Vodafone as it attempts to boost its stagnant bottom line. In May 2023 the telco announced 11,000 redundancies to help it “simplify” its business after its full-year financial results revealed that its income had remained largely unchanged over the previous year. This was followed two months later by the news that Vodafone had agreed to merge with Three, creating the UK’s largest mobile network. However, the Competition and Markets Authority has yet to approve the deal, with both companies forced to deny in October that the merger would see prices increase and reduce competition in the mobile market. 

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