AWS enters 5G cloud market with Telefonica deal

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Telefonica Germany is set to undergo a major change as it prepares to transition one million 5G customers to Amazon Web Services (AWS) cloud later this month.

The move, confirmed by company executives to Reuters, marks an important milestone in the telecomms industry, as AWS moves into the European telecoms market for the first time.

Telefonica’s decision to transfer its core network to a public cloud looks to be an industry-first on this scale, while some other telecommunication networks have migrated non-core operations to public clouds.

Telefonica migrating to AWS cloud

The move highlights an emerging market for cloud companies like Amazon and Microsoft, and the potential for billions in untapped revenue that could send tech giants’ profits on an upward trajectory.

Despite the positive outlook for a broader telecomms-cloud partnership, O2 Telefonica Chief Technology & Information Officer Mallik Rao expresses caution: “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.”

Telefonica has an estimated 45 million customers in Germany, and other networks and cloud companies will observe the migration, which is set to have significant implications for both sectors if successful.

Financial details between AWS and O2 Telefonica remain unconfirmed. However, by moving to AWS’s cloud, Telefonica could expect reduced costs and increased scalability.

Telefonica won’t be the first company to rely on the public cloud for its core operations – US-based Dish built its network on AWS’s infrastructure from the start. However, the move involved no migration, as explained by AWS VP Jan Hofmeyr: “Dish was much easier because they had no existing systems that had to be modified to work with the cloud.”

With the global telecomms cloud market expected to soar to $108.7 billion by 2030, up from a measly $19.7 billion in 2021, Amazon’s timely entry to market could help it continue to account for the biggest slice of the cake for years to come.