Vodafone, the third-largest mobile network operator in the United Kingdom, has signed a $1.5 billion deal with Microsoft to develop new digital and financial services for SMEs across Europe and Africa over the next decade. 

The 10-year deal will also see both companies invest in artificial intelligence (AI) and the Internet of Things (IoT), according to a joint statement on Tuesday. As part of the partnership, Vodafone will invest $1.5 billion in cloud and customer-focused AI services developed in conjunction with Microsoft, while the global software company will invest in Vodafone’s managed IoT connectivity platform, which connects 175 million devices and platforms worldwide. The platform will become a standalone business by April 2024, the statement said.

Margherita Della Valle, Vodafone Group chief executive, said the company “has made a bold commitment to the digital future of Europe and Africa” and hopes that the partnership will “accelerate the digital transformation of our business customers, particularly small and medium-sized companies.” Vodafone will use OpenAI technology running on Microsoft’s cloud computing platform Azure to enhance customer service operations including its chatbot, TOBi. The company also intends to become part of the Azure ecosystem and make the IoT platform available to a vast developer and third-party community using open APIs.

The deal will also see Microsoft house M-PESA, Africa’s largest financial technology platform, on Azure and enable the launch of new cloud-native applications. Vodafone and Microsoft will also be launching a purpose-led program that seeks to enrich the lives of 100 million consumers and 1 million SMEs across Africa. The program is intended to improve digital literacy and youth outreach programs, as well as offer digital services to the underserved SME market on the continent. According to the World Bank, SMEs account for 60% of jobs in Africa.

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