Vodafone Idea eyes $1Bn IBM deal ahead of 5G launch
GANDHINAGAR, INDIA — Mobile network operator Vodafone Idea (Vi) is reportedly close to renewing its $1 billion technology outsourcing agreement with tech giant IBM.
This strategic move is aimed at bolstering Vi’s IT infrastructure as it gears up to introduce 5G services across India’s major cities, thereby enhancing its competitive edge against telecom giants Reliance Jio and Bharti Airtel.
The renegotiated contract, extending beyond its current expiration in April 2024, is pivotal for Vi’s ambition to expand its 5G footprint in 17 priority markets.
An insider disclosed to The Economic Times that Vi’s “new, re-negotiated deal with IBM is likely to be finalized soon.” highlighting the urgency of the agreement.
This development coincides with Vi’s board meeting to deliberate on a Rs 20,000 crore ($2.4 billion) fundraising initiative through a preferential share issue, a proposal that has already received shareholder approval. The infusion of capital is critical for Vi as it seeks to reverse its fortunes and stabilize its financial position.
Under the renewed terms, IBM will assume responsibility for managing, maintaining, and operating Vi’s IT infrastructure. The partnership will focus on leveraging cloud computing, enhancing customer experience, and employing artificial intelligence to modernize and intelligently automate Vi’s data centers.
These efforts are expected to unlock significant cost savings and operational efficiencies, boosting Vi’s productivity.
The deal will also introduce a ‘pay-as-you-go’ model, offering a flexible, subscription-based approach to delivering software and IT services. This model represents a shift from traditional client-server arrangements, promising greater business agility and billing flexibility for Vi.
Industry experts believe the continuation of the Vi-IBM partnership is logical, given the potential for mutual growth and expansion.
Greyhound Research CEO Sanchit Vir Gogia said, “Over the past five years, Vi and IBM have had a fruitful relationship… Any deal of this nature will have substantial elements of cloud computing and other as-a-service components.”
