BT expands AWS deal in hunt for $500 million of new revenues

IoT, managed security and software-as-a-service (SaaS) are the focus of BT’s extended partnership with Amazon Web Services (AWS).

The UK incumbent’s Digital division has been working with AWS since last May, when the hyperscaler was brought in to overhaul BT’s internal IT infrastructure and applications, adopting what it calls ‘cloud-first architecture’. This modernisation programme aims to generate £2 billion in annual savings by 2024.

In addition to reducing costs, BT is also working with AWS to help grow its top line.

On Tuesday, BT announced it will work with AWS to improve upon its existing range of IoT solutions spanning the healthcare, smart places, ports, manufacturing, and transport and logistics sectors. They will also work together on new offerings for customers in various verticals – both in the UK and abroad – that leverage AWS’ cloud services and BT’s network and service delivery expertise. It should be noted that BT’s IoT platform already runs on AWS, so this week’s announcement is very much the expansion of an ongoing partnership rather than a migration or something new being built from the ground up.

As part of their strengthened relationship, BT will also become an AWS Marketplace channel partner, meaning it will resell various managed security and third party SaaS solutions to customers globally.

“AWS and BT Group have shared ambitions at the intersection of cloud and connectivity, and we’re delighted that we have this partnership to frame how we will work together to accelerate these outcomes, for our customers and for the Group,” said Thomas Duecke, COO, Digital at BT, in a statement.

Tuesday’s announcement comes just a week after BT announced that its wholesale arm, together with AWS, is trialling a mobile cloud edge computing service in Manchester that will offer high-speed, low-latency mobile IoT connectivity to businesses and public services.

The UK incumbent reckons its expanded partnership will give it the means to capture as much as $500 million of new revenue from connectivity, digital solutions and services – at home and abroad – over the next five years.

“Moving from a connectivity provider to a digital services provider is a strategic shift to help communication service providers unlock growth,” said Adolfo Hernandez, VP and general manager of AWS’ Telecom Global Industry Business Unit. “This new agreement with AWS helps BT accelerate that journey and deliver greater value to its customers.”

That figure of $500 million over five years doesn’t seem beyond the realms of possibility. A Capgemini report in February revealed that telcos that implement a comprehensive cloud strategy expect to bring in an extra $110 million-$210 million of revenue per year. Its research was based on interviews with 270 telco execs, vendors, and hyperscalers, among others.

BT can probably be considered as having a comprehensive cloud strategy. Not only is it working with AWS on internal IT modernisation and new revenue-generating services, it is also working with Google Cloud on various areas, including cloud infrastructure, AI and machine learning (ML), and data analytics. It is also working with Kyndryl to move a number of applications servicing its legacy copper business and consumer broadband products from mainframe computers to the cloud.

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