Vodafone invests US$1.5 billion in Microsoft's AI and cloud services

Vodafone and Microsoft just teamed up for a 10-year partnership.

Vodafone invests US$1.5 billion in Microsoft's AI and cloud services
Microsoft Bing app is seen in this illustration taken December 27, 2023. REUTERS/Dado Ruvic/Illustration

The backstory: Vodafone, a major telecom player since the 1980s, operates globally offering mobile, internet and TV services in 150+ countries. In the late 1990s, during the dot-com bubble, where the market crashed in 2000 due to excessive speculation, Vodafone briefly matched Microsoft's value. But over the last two decades Vodafone and Microsoft took different paths. Telecom faced revenue struggles, while Microsoft, especially with a focus on artificial intelligence (AI) giant OpenAI, became the world's most valuable public company, beating Apple after trailing it for a decade.

Last year, Vodafone's M-Pesa, assisting 51 million users in Africa with mobile transfers and payments, teamed up with Microsoft. The collaboration aimed to support M-Pesa’s Capability Development Academy to boost capacity for micro, small and medium-sized enterprises (MSMEs) in different African countries, like Kenya, Mozambique, the Democratic Republic of Congo and Tanzania.

More recently: This week, Microsoft made its AI tool, Copilot, available to more people. Initially for big businesses, now everyday users and small enterprises can get "Copilot Pro" for US$20 per month. This extended version, with access to advanced AI models like GPT-4 Turbo, comes after a free version for Bing search. 

The development: Vodafone and Microsoft just teamed up for a 10-year partnership, targeting 300 million businesses and consumers in Europe and Africa. Vodafone will invest US$1.5 billion in customer-focused AI using Microsoft's technology. It’s also moving from physical data centers to the cloud for innovation. In return, Microsoft will invest in Vodafone's IoT (Internet of Things) platform, set to become independent by April this year. Technologies like Copilot and OpenAI will enhance Vodafone's customer interactions, including an AI-backed TOBi chatbot for smart responses. 

Key comments: 

“Generative AI is really changing the game in the opportunities that we can build new services and new capabilities,” said Vodafone’s Chief Technology Officer Scott Petty in an interview. It means Vodafone can “launch a whole set of new applications, from everything from customer service to helping us respond to RFPs better to making our software engineers more effective and more productive.”

"That's the part that is really going to catch each and every one of our customers," said Vodafone's CFO Luka Mucic, referring to Microsoft’s leadership in AI and partnership with OpenAI. 

"The IoT assets are critical in helping us address the sustainability needs of so many of our customers in hard-to-abate sectors," said Microsoft Chief Commercial Officer Judson Althoff.

“We are excited to bring generative AI capabilities to help customers make more intelligent financial decisions,” said Althoff.