RE: At Last16 Jan 2024 08:54
Stealth
"Vodafone will invest $1.5 billion over the next 10 years in cloud and customer-focused AI services developed in conjunction with Microsoft." - This statement doesn't imply msft is getting the 1.5bn investment. Typically in such arrangements there will be a ledger of credit owed to, in this case, vod, based on the services rendered by msft.
Don't forget msft employs over 220k people, of which 80-90% are white collar workers who most likely qualify for a business mobile in addition to fixed line phones. In the 1.5bn, a portion is the credit towards the services offered for free.
Also, don't forget that vod has its in-house large army of engineers and developers which is also baked into this figure and the estimated R&D expense. Already Vod collaborates with Google and Oracle and would not be surprised if they bunch them all together as part of their efforts to lead this segment in business experience automation intelligently. You can't achieve an overarching business automation by maintaining disparate silos. Vod has already come a long way in harmonising their back-office processes and data quality.
Let's crunch some numbers based on a higher and lower band of expected msft spend on vod:
80% white collars--> 176k employees
upper band of average monthly spend per employee->50-->105m/year
Lower band of average monthly spend per employee->20-->42m/year
Over a 10-year period we have the following:
Upper band-->1.05bn
Lower band -->422m
If the truth lies somewhere in the middle, msft spent is ca700m over a 10 year period. I know its a simplistic calculation and would not be surprised if the contract designed to incorporate a min spend of 20/month/employee and the rest as variable to keep the costs down.
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