Microsoft is acquiring AT&T’s Network Cloud business as part of a new deal that will see Azure handle all of AT&T’s 5G traffic

Back in 2019, Microsoft and AT&T announced a $2 billion partnership that would focus on AI, 5G, and the shifting network operations to the cloud, in what AT&T called its ‘public cloud first’ strategy.

Now, two years later, and AT&T has announced that it will be moving its 5G network to the Microsoft cloud, allowing all of its traffic to be managed using Microsoft Azure technologies. AT&T’s 5G core will be the first to be shifted to the cloud, with AT&T’s entire existing network cloud ported to Azure over the next three years.

As part of the deal, Microsoft will also acquire AT&T’s carrier-grade Network Cloud platform technology.

AT&T says that the move will reduce its operating costs and allow them to leverage a wider ecosystem of software developers creating new 5G solutions. Naturally, AT&T will continue to operate its own network and retain its customer relationships.

For Microsoft, the move will enhance their Azure for Operators offering that it hopes to expand to telcos on a global level.

“With Azure, operators can provide a more flexible and scalable service model, save infrastructure cost, and use AI to automate operations and differentiate customer offerings,” said Jason Zander, EVP of Azure at Microsoft. “Through our collaboration with AT&T, Microsoft will expand its telecom portfolio to support operators with a carrier-grade cloud that provides seamless experiences across Microsoft’s cloud and the operator’s network.”

Financial terms of the deal were not disclosed.

AT&T is hardly alone in shifting to the public cloud in recent months. Dish, for example, notably formed a major strategic 5G partnership with Amazon Web Services (AWS) back in April, while other operators including Vodafone, Deutsche Telekom, Telefonica, and Verizon, are all engaging in discussions with public cloud providers in various forms.  

Facilitating multi-access edge computing (MEC) solutions seems to be emerging as a major focus for these deals, with AWS recently scoring a significant win with Vodafone to handle their MEC services, while Ericsson has signed a similar deal with Google Cloud to develop MEC solutions.

For many of these large telcos, it seems only a matter of time before the allure of the public cloud and outsourcing their network operations becomes too strong to resist.


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