Vodafone and Microsoft ink $1.5bn deal for AI, Cloud, and IoT

Telecoms giant Vodafone has announced a significant 10-year partnership with tech giant Microsoft. This collaboration aims to advance generative AI, digital enterprise, and Cloud services for over 300 million businesses and consumers across Vodafone’s European and African markets.

Under this agreement, Vodafone will allocate $1.5 billion towards the development of customer-oriented AI, leveraging Microsoft’s Azure OpenAI and Copilot technologies. This move is expected to phase out physical data centres, favouring more cost-effective and scalable Azure Cloud services.

In a reciprocal arrangement, Microsoft will become an equity investor in Vodafone’s managed IoT platform, which is the largest global IoT platform and is set to be established as an independent entity by April 2024. Microsoft’s involvement will also extend to enhancing Vodafone’s mobile financial platform in Africa.

The specifics of the agreement include

Vodafone’s Chief Financial Officer, Luka Mucic, expressed enthusiasm for Microsoft’s AI expertise, particularly in its alliance with OpenAI: “That’s the part that is really going to catch each and every one of our customers.” He emphasised the transformative impact of Microsoft’s AI leadership, particularly its OpenAI collaboration, on Vodafone’s customer services.

Microsoft’s Chief Commercial Officer, Judson Althoff, highlighted the strategic importance of Vodafone’s IoT and financial services capabilities. Althoff mentioned the use of “digital twins” by Microsoft to model manufacturing environments in the Cloud, enabling process improvements, saying: “Vodafone’s IoT stack allows us to go into those environments, model the environment, create large-scale data stores, and use AI to help customers meet their sustainability goals.”

The partnership also focuses on Vodafone’s M-PESA mobile money platform, operational in several African countries, including Kenya and Tanzania. Althoff expressed excitement about introducing generative AI features to aid customers in making more informed financial decisions, aligning with shared goals of enhancing digital literacy in the region.

Commenting to IoT Insider, Luc Vidal, Head of M2M/IoT Business and Mobility at BICS – a Mobile digital communication company – believed the move is indicative of IoT’s growth and the growing interest in digital twins’ IoT equivalent, ‘connectivity twins’: “Vodafone’s partnership with Microsoft shows the sustained growth we are seeing for IoT service and will likely only fuel increased attention in ‘connectivity twins’. They’re the missing piece enterprises need to virtually clone IoT devices, including their connectivity components, for a single real-time view of their end-to-end IoT solutions, along with all device and application components. Digital twins turn device-centric information into a business visualisation allowing more efficient decisions.”

Vidal went on to explain how IoT’s growth will only fuel connectivity twins as a concept deployed in the sector as networks expand: “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. Without these, businesses deploying IoT will effectively be blind, lacking real control over their systems and devices.”

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