Key Takeaways from Partnerships Between Vodafone and (Google and Microsoft)

Hyperscalers are trying to keep their growth rate expectations high and sign long-term deals with telecom companies globally.

Vodaphone, a prominent European telco, signed deals with Microsoft and Google in 2024. The deal with Microsoft was signed in January, and the deal with Google was signed a couple of days ago.

Both deals are worth one billion plus dollars and will last 10 years.

Google's partnership with Vodafone is focused on increasing and improving the consumer's product portfolio with Google products (Pixel, Google One, Android TV), increasing the usage of Google AI products internally, bringing new cybersecurity offerings into the market using the Google platform, and automating Vodaphone's back-office operations.

Microsoft's partnership is mainly focused on the enterprise side. Vodafone will use Azure Open AI to improve customer experience and internal productivity (using chatbots), modernize its data centers on Microsoft Azure, and distribute Microsoft services (Azure, Security, and Modern Work). Microsoft plans to invest in Vodafone’s IoT-managed connectivity platform and help further scale M-Pesa (a Fintech company in Africa, partly owned by Vodafone) by housing it on the Azure platform.

Takeaways

1.        Hyperscalers are trying to access a more extensive European and African market, and Telco is trying to get access to better technology.

2.        For hyperscalers, widespread technology usage would help them sell their products to other regional enterprises.

3.        The long-term nature of these agreements makes it challenging to estimate the overall value for both Hyperscalers and Telco accurately. Factors such as fluctuating market conditions, evolving technology, and changing business needs contribute to the complexity of determining the precise value of these deals.