AT&T Goes Deeper Into the Cloud With Microsoft Azure Deal

By Agam Shah 

AT&T Inc. said Wednesday that it is shifting most internal business applications used by its biggest unit to Microsoft Corp.'s Azure cloud, an effort to cut costs and free up resources for network development. Terms of the deal weren't disclosed.

Microsoft's deal with AT&T Communications, which had revenue of $144.6 billion in 2018, involves moving data-center infrastructure and applications to the Azure cloud. As part of the agreement, AT&T Communications will have its employees use Microsoft's cloud-based productivity tools and services.

The AT&T Communications unit includes mobile, broadband, entertainment and enterprise consulting services. The communications division generated nearly 85% of the company's revenue in 2018.

The deal comes one day after International Business Machines Corp. said that AT&T would move internal applications used by its $37 billion-a year-business services unit to IBM's cloud.

Like many companies, AT&T is moving away from owning and operating its own IT infrastructure so it can derive benefits of renting software and computing resources over the internet. That arrangement, known as cloud computing, can include the advantages of greater scale and up-to-date tools, providers maintain.

Some large companies build their own clouds for private use. Microsoft Azure is known as a public cloud because it sells its services to others. AT&T said it wants to move a majority of its non-network applications to public clouds by 2024.

The deal with Microsoft will help the company innovate, according to Steve Stine, senior vice president of business transformation at AT&T.

Management of applications will be faster in the cloud, and the company will benefit from being able to focus more resources on higher-priority investments such as building network capacity, Mr. Stine said. "That is fundamental to our success and serving our customers going forward," he told CIO Journal.

From 2014 to 2018, AT&T invested more than $130 billion in wireless and wireline networks.

Those investments include next-generation 5G wireless technology, which provides faster mobile connections and supports a proliferation of new internet-connected sensors in objects and machines.

AT&T already is working with Microsoft to test and deploy 5G applications that take advantage of the Azure cloud, Mr. Stine said. So-called edge computing devices such as sensors and drones are expected to make use of 5G. To facilitate these 5G applications, the companies are exploring ways to bring computing power and services closer to the edge of the network, Mr. Stine said.

Last month, AT&T and Microsoft announced a pilot program that applies artificial intelligence and the Internet of Things to real-time safety monitoring of drones, according to Mr. Stine.

"They can rapidly deliver value-added services over their 5G network -- that's the transformational value AT&T gains," said Deepak Mohan, research director at International Data Corp.'s enterprise infrastructure practice.

Write to Agam Shah at [e-mail]

(END) Dow Jones Newswires

July 17, 2019 20:52 ET (00:52 GMT)

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