Quiver Quantitative - Amazon (NASDAQ:AMZN) Web Services (AWS), a subsidiary of Amazon (AMZN), is set to move one million 5G customers of Telefonica (BME:TEF) Germany, also known as O2 Telefonica, to its cloud platform later this month, marking a significant leap for the U.S. retailer into the global telecoms market. This move represents the first instance of an existing mobile operator switching its core network to a public cloud. Telefonica Germany, a subsidiary of the Spanish group Telefonica, oversees 45 million customers in the country.
While some telecom networks have transitioned their IT and non-core operations to public clouds, switching the core network is unprecedented. The core network, which routes data and calls securely at high speeds, is the heart of any mobile network. By moving it to the cloud, Telefonica will benefit from reduced costs, improved scalability, and seamless repairs without service disruptions. Mallik Rao, Chief Technology & Information Officer at O2 Telefonica, noted, "I want to see it working for at least one to two quarters and have a roadmap to move at least 30-40% of my customer base by 2025-2026."
Market Overview: -Amazon Web Services (AWS) secures a landmark deal with Telefonica Germany, migrating one million 5G customers to its cloud platform.
Key Points: -This marks the first time a major telecom operator shifts its core network to a public cloud. -The move signifies a potential shift in the telecoms sector, with cloud giants like Amazon and Microsoft (NASDAQ:MSFT) vying for a slice of the multi-billion dollar market. -Telefonica aims to leverage the cloud's scalability, cost efficiency, and faster repairs for improved service delivery.
Looking Ahead: -The success of this collaboration could pave the way for widespread adoption of cloud-based telecom networks. -Traditional players face pressure to innovate and potentially collaborate with "frenemies" like Amazon to maintain competitiveness. -The global telecom cloud market is projected for significant growth, positioning AWS and other providers for substantial gains.
Nokia (HE:NOKIA) will provide the software for the core network, while AWS will offer the cloud infrastructure. This deal builds on AWS's earlier partnership with U.S.-based Dish Network, which became the only telecom company to use AWS cloud for its core network after building its mobile network from scratch in 2021. "The cloud players continue to get better and building more credibility with the operators to be able to move network functions into the cloud," said Raghav Sahgal, president of cloud and network services at Nokia.
The global telecom cloud market is expected to grow from $19.7 billion in 2021 to $108.7 billion by 2030. Amazon aims to capitalize on this growth opportunity. Jan Hofmeyr, AWS's vice president, said, "We want to make it a business to run telco workloads," indicating that the company expects more telecom partnerships within the next 12 months.
This article was originally published on Quiver Quantitative