London-based telecommunications company Vodafone (VOD) on Tuesday agreed to a 10-year partnership with Microsoft (MSFT) to leverage the tech giant’s generative artificial intelligence and cloud technology.
The deal involves a $1.5 billion investment from Vodafone into Microsoft over the next decade.
As part of the deal, Microsoft will use Vodafone’s connectivity services and said it intends to invest in the company’s Internet of Things platform, which is set to become a separate business by April 2024.
Microsoft said the AI services that Vodafone will use will be built on unbiased and ethical privacy and security policies already highlighted by Vodafone’s framework on responsible AI.
Under this framework, Vodafone said that it believes in transparency and ethics when it comes to AI. This means, according to Vodafone, that customers should be informed when they’re interacting with an AI algorithm or chatbot.
Vodafone’s approach to AI additionally focuses on human oversight, ensuring that algorithmic outputs “do not inadvertently guide us to make decisions that may affect any group or individual in an unfair way.”
Vodafone said that it is additionally focused on preserving customer privacy and data security and training its employees to better understand how to incorporate AI into their work.
Vodafone currently uses AI to identify where network capacity is needed to optimize its services, increase employee efficiency and support decision-making based on AI-fueled data analysis. The company additionally uses AI chatbots to help handle customer questions and inquiries.
Details of the collaboration
“Today, Vodafone has made a bold commitment to the digital future of Europe and Africa,” Vodafone CEO Margherita Della Valle said in a statement. “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.”
Shares of Vodafone fell about 1% Tuesday morning to a price of $8.57.
The two companies plan to collaborate in several areas, including AI, the company’s Internet of Things platform, cloud growth, enterprise growth and digital acceleration in Africa.
Vodafone will use Microsoft’s AI technology both to enhance its customer-facing AI programs, as well as its internal working practices. The telecom company will additionally be working with Microsoft’s cloud sector, Azure, to accelerate the growth of its cloud services while reducing its operational costs.
As part of the deal, Vodafone will help distribute Microsoft’s suite of services, including Teams Phone Mobile, to enterprise clients across Europe.
Both companies said they are further investing in Africa’s digital acceleration. This includes an effort by Microsoft to scale Vodafone’s M-Pesa, a prominent fintech platform in the country.
“This new generation of AI will unlock massive new opportunities for every organization and every industry around the world,” Microsoft CEO Satya Nadella said in a statement. “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.”
Shares of Microsoft on Tuesday morning briefly hit a new 52-week high of $394.03 before stabilizing at $392. The company, with a market cap of $2.9 trillion, has displaced Apple, which has a market cap of $2.82 trillion, as the world’s largest company.