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Vodafone inks 10-year, $1.5 billion partnership with Microsoft

Vodafone has struck a wide-ranging deal with Microsoft that could light the touchpaper on CEO Margherita Della Valle's plan to revive the telco's fortunes.

Nick Wood

January 16, 2024

4 Min Read

It's a 10-year partnership that reads like a greatest hits of cloud-based enterprise and consumer solutions, and extends to all Vodafone markets in Europe and Africa, which equates to an addressable market of some 300 million people.

Voda and Microsoft have listed five areas of collaboration, with generative AI unsurprisingly at the top of it.

The UK-based telco will use Microsoft Azure OpenAI to offer real-time, proactive and 'hyperpersonalised' experiences across all customer touchpoints, including its digital assistant TOBi. Voda employees will also use Microsoft Copilot to transform working practices and boost productivity.

IoT is another significant aspect to the partnership. It will see Microsoft invest in Vodafone's global Internet of Things (IoT) managed connectivity platform, while Vodafone will join the Azure ecosystem, which will make the platform available to a vast number of third-party developers via open APIs.

The partnership will also see Voda migrate its M-Pesa mobile money service to Azure. The two will also launch initiatives to boost Africa's SME market, offering digital literacy programmes and new SME services there.

Vodafone has also committed to distribute various Microsoft cloud services to enterprise customers.

Last but not least, Vodafone will make extensive use of Azure as part of its internal cloud transformation, simplifying and reducing the operational costs of its IT estate. As a result, Voda will migrate from some of its own European data centres to those operated by Microsoft.

In addition, the sprawling partnership will also see Vodafone spend $1.5 billion to co-develop with Microsoft a range of cloud and customer-focused AI services. Microsoft has also agreed to avail itself of Voda's fixed and mobile connectivity services.

Such is the scale of this partnership that its success or otherwise might make or break Della Valle's tenure.

Shortly after taking the helm last year, Della Valle presented a comprehensive turnaround strategy that includes putting greater emphasis on Vodafone Business, a division that she considers to have the right capabilities and market position to capitalise on demand from enterprises as they carry out their digital transformations.

Della Valle was also clear about investing in improved customer care and journeys in an effort to return to customer-led growth. She is also keen to simplify Voda and make it more agile – which for 11,000 employees unfortunately also means finding a new job.

"My priorities are customers, simplicity and growth," she said at the time.

This week's partnership with Microsoft ticks a lot of these boxes.

"This unique strategic partnership with Microsoft will accelerate the digital transformation of our business customers, particularly small and medium-sized companies, and step up the quality of customer experience for consumers," Della Valle said.

Industry experts have wasted no time in chipping in with their observations.

"This partnership between Microsoft and Vodafone shows one of the pathways available to telcos aiming to grow their business-to-business (B2B) revenue beyond basic connectivity services," noted Keith McAleese, TMT head at NTT Data UK&I. "With Microsoft's generative AI and Vodafone's extensive customer base, they're uniquely positioned to create highly personalised services that could reshape consumer expectations."

Belgium-based connectivity provider BICS drew attention to the IoT element of the partnership, with Luc Vidal, head of M2M/IoT business and mobility positing that it will fuel the development of so-called 'connectivity twins' – which is a succinct way of saying that enterprises want a real-time view on – and control over – every element of their end-to-end IoT solutions.

"As the volume of IoT devices continues to ramp up, these connectivity twins will be essential for enterprises to troubleshoot problems faster, better predict downtime and maintenance, facilitate end-to-end security, and improve overall service quality," he said.

For Microsoft CEO Satya Nadella, this partnership represents a ringing endorsement of his cloud and AI-focused strategy.

"This new generation of AI will unlock massive new opportunities for every organisation and every industry around the world," he said. "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."

There is a lot riding on this partnership for Della Valle and Vodafone, and it will be interesting to see whether it delivers that all-important turnaround in the telco's fortunes.

About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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