Vodafone eyes cloud overhaul and generative AI gains in $1.5 billion deal with Microsoft

Vodafone and Microsoft have agreed on a $1.5 billion, 10-year partnership that will transform Vodafone’s cloud capabilities through Microsoft’s Azure platform.

The telecoms giant said the deal will enable it to accelerate digital transformation efforts as part of a virtual data center migration to Microsoft Azure. 

Long-term, Vodafone expects the move to curb maintenance and energy costs across operations in both Europe and Africa.

In a statement confirming the partnership, Microsoft chief executive Satya Nadella said the tech giant will support Vodafone in applying “the latest cloud and AI technology” to enhance customer experiences.

Vodafone Group chief executive Margherita Della Valle said the partnership represents a “bold commitment” from the telecoms giant, and one that will benefit both consumers and businesses alike.

“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.”

Vodafone looks to generative AI-powered services 

Cloud transformation is just one of five key areas of collaboration identified by the two companies. 

The deal will grant Vodafone access to Microsoft’s Copilot AI capabilities, allowing them to develop a range of customer-facing generative AI tools. Vodafone said it wants to improve customer service through reactive, personalized digital assistants.

Microsoft also intends to help scale M-Pesa, a fintech subsidiary of Vodafone that dominates the financial transaction market in Africa. Microsoft will host M-Pesa on Azure, while both companies will also launch a digital literacy and outreach program in the region.

As part of the deal, Microsoft also plans to “invest heavily” in Vodafone’s standalone Internet of Things (IoT) connectivity platform, which connects 175 million devices and platforms worldwide.

Vodafone will also extend its commitment to distributing Microsoft’s cloud, security, and productivity services across Europe. This keeps in line with Microsoft’s strategy to become the region's leading platform for business. 

The focus here is on small and medium sized businesses (SMBs), who will benefit from deploying Microsoft services at a slower and more adaptable pace.

Leveraging their respective strengths, Vodafone and Microsoft look to scale their digital platforms to more than 300 million businesses, public sector organizations, and consumers across Europe and Africa as a result of the deal.