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Vodafone Recruits IBM for Its Cost-Cutting Efforts in India

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Vodafone Idea aims to save $1.2 billion in costs

Vodafone (VOD) recently signed IBM (IBM) on to provide it with cloud services that will allow it to cut costs and improve the customer experience for its more than 387 million subscribers in India.

Vodafone’s Indian business operates as Vodafone Idea, a joint venture formed from the merger of what was known as Vodafone India and its local rival Idea Cellular in an attempt to counter surging competition in India’s wireless market.

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Vodafone is aiming to save ~$1.2 billion in operating costs through its Indian subsidiary by the end of 2021. The five-year technology outsourcing deal with IBM will allow Vodafone Idea to operate more efficiently and support the company’s efforts to achieve its cost-saving goal. For IBM, the Vodafone contract is an important win ahead of its closing its $34 billion deal to purchase Red Hat (RHT), a transaction that’s expected to bolster its hybrid cloud business.

Vodafone’s Rest of World revenue fell 11%

In addition to cutting costs, Vodafone is also keen to expand its network coverage in India. Vodafone Idea has signed contracts with Nokia (NOK), Ericsson (ERIC), Huawei, and ZTE to supply it with network equipment to support the expansion of its 4G coverage in India, the Economic Times reported.

Vodafone reports revenue from international subsidiaries such as Vodafone Idea under a segment known as ROW (Rest of World). Vodafone’s ROW revenue fell 11% year-over-year to ~$2.8 billion in the fourth quarter, the company’s most recently reported period.

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