Vodafone has signed a 10-year deal worth £1.2 billion with Microsoft that will see the telecoms giant use Microsoft’s generative AI, digital and cloud services.

The deal, will offer over 300 million businesses and public sector organisations access to the software giant’s offerings alongside it being able to use Vodafone’s fixed and mobile connectivity services.

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The software company added that it also aims to invest in Vodafone’s managed IoT connectivity platform, which will become a separate, standalone business by April this year.

As a result, the new company will attract new partners and customers, driving growth in applications and expanding the platform to connect more devices, vehicles and machines.

However, as part of the deal, Vodafone will replace some of its European data centres with virtual ones operated by Microsoft’s Azure cloud platform, it revealed.

Vodafone Group CEO Margherita Della Valle said: “Today, Vodafone has made a bold commitment to the digital future of Europe and Africa.

“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.”

Microsoft CEO Satya Nadella added: “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.”

Read more: Interview: Vodafone UK Brand & Marketing Director on ‘strategic’ brand positioning, sustainability and social responsibility