Telefonica and Microsoft Join Forces to Accelerate Telecom Innovation
Telefonica, S.A. TEF and Microsoft Corporation MSFT have enhanced their collaboration, launching a new initiative to drive digital transformation in telecommunications. This project aims to harness Open Gateway, a GSMA-led effort, to turn telecom networks into programmable platforms. Central to this initiative is Kernel, Telefonica’s artificial intelligence (AI)-powered platform for digital services.
The partnership will see Kernel’s functionalities migrate to Microsoft Azure, integrating it into Microsoft’s Software-as-a-Service offerings. This shift will simplify the digital transformation process for mobile operators and promote the adoption of Open Gateway. Additionally, the two companies will implement a unified “Go-to-Market” strategy, making Kernel-based digital services accessible to operators, developers, and telecom companies through Microsoft’s Azure Marketplace.
Beyond this migration, Telefonica and Microsoft will collaborate on developing Generative AI and Advanced Analytics capabilities. This will enhance Kernel’s features and open up new avenues for AI-driven decision-making. The partnership will also serve the Open Gateway community, providing seamless access to Microsoft’s vast ecosystem, including its partners, Independent Software Vendors, and global research hubs. This collaboration is set to fast-track the development of next-generation digital solutions in the telecom sector.
Telefonica SA Price and Consensus
Telefonica SA price-consensus-chart | Telefonica SA Quote
This partnership places Telefonica and Microsoft at the forefront of digital transformation in telecommunications, paving the way for increased innovation and efficiency throughout the industry.
Telefonica is actively pursuing strategic partnerships to ensure long-term growth. For instance, on February 14, 2025, the company partnered with Collibra, which specializes in data intelligence and governance. This collaboration aims to provide enterprises with data governance solutions that assure reliability, transparency, and compliance. With Collibra’s unified platform integrated into Telefonica’s services, organizations in Spain can leverage high-quality, well-managed data to enhance decision-making and bolster AI adoption.
Additionally, on January 30, 2025, Telefonica entered into an agreement with IBM to create advanced security solutions that protect businesses and public institutions against risks associated with the post-quantum landscape. By combining Telefonica’s cybersecurity strengths with IBM’s expertise in quantum-safe cryptography, they aim to proactively safeguard critical data.
On January 23, 2025, Telefonica’s subsidiary, Movistar, launched a notable offering of a 12-month free subscription to Perplexity Pro, an AI-driven response engine designed to provide clear, tailored responses to user inquiries.
As Telefonica continues to focus on maximizing value through strategic investment in its core operations, it remains vigilant of challenges such as high debt levels, fierce competition, and foreign exchange threats. Currently, the company’s debt-to-capital ratio stands at 0.61.
TEF’s Zacks Rank & Stock Price Performance
Currently, TEF holds a Zacks Rank #3 (Hold). The company’s shares have increased by 4.6% in the past year, while the Zacks Diversified Communication Services industry has faced a decline of 12.9%.
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Stocks to Consider in Utilities Market Space
Other well-ranked stocks in the broader utility sector include American Electric Power Company, Inc. AEP and Exelon Corporation EXC. Both currently have a Zacks Rank #2 (Buy). You can view the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for American Electric’s 2025 earnings per share is $5.87, with a long-term earnings growth rate of 6%. Over the past year, its shares have surged by 30.4%.
For Exelon, the Zacks Consensus Estimate for 2025 earnings per share is $2.63. The company has beaten estimates in three of the last four quarters, with an average surprise of 7.63%. Exelon’s long-term growth rate is estimated at 5.7%, and its stock has climbed by 21.8% in the past year.
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This article originally published on Zacks Investment Research (zacks.com).
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