(Jan 16): Vodafone Group plc has struck an agreement with Microsoft Corp to invest US$1.5 billion (RM6.97 billion) over the next decade to develop a range of businesses including artificial intelligence (AI), digital payments and the Internet of Things (IoT).

As part of the agreement, Vodafone will use OpenAI technology running on Azure to enhance customer service operations including its consumer chatbot, and Vodafone employees will have access to Microsoft Copilot, the companies said in a statement on Tuesday.

For Vodafone, the deal helps chief executive officer Margherita Della Valle streamline company operations and enhance its offers for the enterprise division, which she’s prioritised. It will also allow Vodafone to sell more Microsoft services to business clients, including Azure and Teams, and allow the telecom operator to move away from using its own data centres and onto Azure.

“Generative AI is really changing the game in the opportunities that we can build new services and new capabilities,” chief technology officer Scott Petty said 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.”

Microsoft also intends to invest an undisclosed amount in Vodafone’s IoT division, which the UK-based telecommunications carrier plans to carve out by April. Vodafone will invite other partners to invest as well while maintaining a majority stake in the business, which generates about €1 billion (RM5.09 billion) a year in sales, Vodafone’s chief financial officer Luka Mucic said in an interview.

Microsoft is working to find more paying customers for its Copilot AI-assistants after agreeing to pump US$13 billion into its partner OpenAI. Corporate customers pay US$30 per user per month for access to Copilots, approximately doubling what corporate customers typically pay for Microsoft’s Office suite of products.

For a brief time after the dot-com bubble burst, Vodafone was valued at about as much as Microsoft. But in the last two decades, the companies’ fortunes have diverged as the telecommunications industry has struggled to make revenues that keep pace with its regular heavy investments in network infrastructure.

Meanwhile, Microsoft’s bet on OpenAI has put the software maker at the forefront of the generative AI boom and helped it surpass Apple Inc’s market value to become the most-valuable publicly traded company.

Vodafone will run its popular mobile money service M-Pesa on Azure, which Vodafone said will let it launch new cloud-based apps. M-Pesa is one of the world’s biggest mobile-based financial services, boasting more than 51 million customers across seven countries in Africa, according to Vodafone’s website.