Microsoft has signed a deal to sell its networking business Metaswitch to Utah-based cloud communications provider Alianza. The transaction is expected to close in the first quarter of 2025; the fee has not been disclosed. Microsoft only acquired Metaswitch in 2020, as part of a splurge on telecoms software, which also included Affirmed Networks; the two companies were positioned, ostensibly, to sell core 5G networks to enterprises and operators, respectively.
In the end, Microsoft’s experiments with enterprise networking were short lived, and ultimately failed. Metaswitch’s private 5G business has been effectively mothballed since the summer. Microsoft was quick to restate its commitment to the telecoms market. It said it would partner with Alianza, which serves various communications providers, including mobile operators, to take its core enterprise cloud and applications to market.
The acquisition is for Metaswitch’s voice and communications software services, IP protocol, and engineering talent. It will give Alianza, founded in 2009, a total base of around 1,000 service providers, including “19 of the top 20” mobile operators, plus a portfolio to create a “path for [them] to enter the cloud-native and AI services economy”, it said. It said mobile operators will be better positioned to grow service revenue, and to consolidate, modernise, and monetise their network and cloud infrastructure. They will be better positioned to innovate, it aid.
In a supplied quote, analyst house IDC explained the deal in terms of the fight for telcos to fend off ‘over-the-top’ (OTT) providers, riding on their networks, from cannibalising their core services. Rohit Mehra, group vice president at the firm, said: “Operators face increasing threats from OTTs, whose services are gradually eroding their long-held positions in… voice and collaboration services. [This] combination… brings together… services and expertise… to deliver… capabilities for service providers to modernize at their own pace.”
A statement said: “Over the past decade, service providers have been placing a multi-trillion dollar bet that improving network capacity would result in revenue growth, but the bet hasn’t paid off. Industry-wide revenue has stagnated and in the race for bandwidth, service providers have neglected their patchwork of legacy infrastructure, technology, and systems, creating a massive gap in their ability to maintain, let alone grow services revenue.”
Yousef Khalidi, corporate vice president at Microsoft, said: “Alianza’s commitment to innovation and customer experience sets a strong foundation for Metaswitch customers to continue to grow their business. The telecommunications industry remains a priority for Microsoft, and we will continue to empower telecom operators to modernize, monetize, and innovate through our secure AI platform. As we advance our cloud platform and AI capabilities, partners like Alianza are crucial for providing support to our mutual customers.”
Brian Beutler, founder and chief executive at Alianza, said: “The acquisition of Metaswitch is about resetting the playing field and enabling service providers to reassert their market leadership. The Alianza cloud communications platform empowers operators to monetize network investments through improved customer experiences and the delivery of modern, high-margin communications service offerings.”
