Vodafone has announced a new 10-year strategic partnership with Microsoft, in a bid to offer its digital scale platforms to more than 300 million businesses, public sector organisations and consumers across Europe and Africa.

As part of the partnership, the firms will collaborate to transform Vodafone’s customer experience using generative AI from Microsoft.

The companies will also look to hyperscale Vodafone’s managed IoT connectivity platform, develop new digital and financial services for businesses, particularly SMEs across Europe and Africa, and overhaul the mobile services' global data centre cloud strategy.

Chief executive at Vodafone Group, 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."

As a result of the deal, Vodafone will invest $1.5bn (£1.2bn) in cloud and customer-focused AI services developed in conjunction with Microsoft over the next 10 years, while Microsoft will use Vodafone’s fixed and mobile connectivity services.

Furthermore, the partnership will expand Vodafone’s money transfer service, M-PESA, in Africa to improve financial inclusion across the continent.

The deal will also see Vodafone accelerate digital transformation and operational efficiencies in virtual data centre migration to Microsoft Azure.

Investment director at AJ Bell, Russ Mould, added: "Vodafone might have been hoping that news of a strategic partnership with Microsoft, involving the market’s hottest theme, AI, would have delivered more of a kicker to a moribund stock this morning.

"The company is planning a significant outlay as it looks to use Microsoft’s generative AI technology to build out its ‘Internet of Things’ connectivity plan. It wants to develop new digital and financial services for small and medium sized businesses in Africa and Europe and revamp its data centre cloud strategy.

"As the benefits of the partnership come through, they may help to provide some forward momentum to a business which has been stuck in reverse for years."

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