Microsoft wins multi-billion dollar cloud deal with AT & T

Microsoft has just signed a major contract for its cloud computing business, announcing Wednesday that AT & T would use the company's Azure infrastructure and move most of its employees to the app package Microsoft 365 Productivity and Security.

The multi-year agreement amounts to more than $ 2 billion, according to a person familiar with the case who would have asked not to be named, because the conditions are confidential. For Microsoft, which is pursuing Amazon Web Services in the cloud infrastructure market, AT & T is both a significant buyer and a highly recognizable brand, with significant data storage and computing needs for its approximately 250,000 employees .

Most of Microsoft's recent big hits have occurred in the retail market, where companies such as Walmart's Gap, Kroger, Albertsons and Jet.com do not want to fund Amazon, their main competitor, as much more than the leader in online retailing continues retail. AT & T is a long-time Microsoft customer and, moving its technology to the cloud and the latest applications, points out that Microsoft can use its existing position in the enterprise market as an advantage over AWS.

"The opportunity to work with people who have solid business creation experience and who are recreating themselves in digital form is a very important part of why we chose Microsoft," said John Donovan, CEO of Microsoft. Company AT & T Communications, in an interview with CNBC.

The agreement is not exclusive and AT & T is allowed to use other cloud providers than Azure, said Donovan. Tuesday, IBM announced a contract with AT & T involving a migration to the cloud.

Microsoft investors are counting on continued expansion of Azure, which grew 73 percent in the last quarter, even though the company still has not surpbaded its numbers. His achievements in the cloud have been the driving force behind Satya Nadella's success since becoming CEO in 2014, and catapulting Microsoft's $ 1,000 billion market capitalization into the world's largest publicly traded company. .

Shareholders are so optimistic about Microsoft's prospects that they are now pricing the company at more than 26 times its earnings for the next 12 months, the highest multiple since 2002, according to FactSet.

AT & T claims to be becoming a "first public cloud" company, transferring its applications from its data centers to Azure and its communications employees to Microsoft 365, which includes Windows 10, Office 365, and cloud services. mobility and security. AT & T Communications accounts for approximately 78% of the company's total business figure.

Beyond the internal use of Microsoft technology by AT & T, the two companies are working together on the development of tools for artificial intelligence and high speed 5G wireless, and are planning to 39, announce new services later this year.

"The two companies are considering scenarios with 5G allowing near instantaneous communications to a first responder who uses AI-based live voice translation to communicate quickly with a needy person who speaks a different language", have they said in a press release released Wednesday.

Accenture estimated last year that US telecom operators would spend $ 275 billion over seven years to establish communication networks for autonomous cars and the world of connected devices or the Internet of Things.

"With projects like 5G, we absolutely believe that the combination of AT & T and Microsoft can really meet the demand that will be very wide for a commercial innovation," Nadella told CNBC.

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