German Telecom Shares Higher Due to Strengthened Partnership with Google Cloud
Fueling Growth: Deutsche Telekom's Boost from Google Cloud Partnership
Google's cloud division is teaming up with Deutsche Telekom's subsidiary, T-Systems, in a partnership that could prove beneficial for both parties, especially in the competitive German cloud market. Google is planning to invest heavily in its German cloud business, with a potential billion euros outlay by 2030.
In a bid to catch up with cloud powerhouses like AWS and Azure, Google is partnering with T-Systems to serve sensitive sectors, such as finance and government. According to Google Cloud CEO Thomas Kurian, this collaboration will be key to their goals in the German market, "We will expand our work with T-Systems... By working with a partner, you need to work with a partner. Therefore, we will invest in this partnership."
T-Systems' Boost with System
Back in autumn 2021, T-Systems partnered with Google to build cloud solutions for the public sector, businesses, and healthcare in Germany. As part of this agreement, both companies are testing a range of network services, including 5G offerings in Austria and data roaming solutions. Deutsche Telekom is also leveraging Google Cloud's expertise to analyze its networks more thoroughly.
The partnership comes at a critical time for T-Systems, as the systems division of Deutsche Telekom has been struggling, with a decline in revenue due to its "classic IT infrastructure business." However, the Digital Solutions unit is growing, with a 10% increase in Q2 2022.
The collaboration with Google could potentially catapult the Telekom subsidiary towards growth, given the high potential for Google's relatively late entry into the cloud market.
Cross-Atlantic Success
The US arms of Telekom are already enjoying success, with a 9.3% increase in profits for the telephone and mobile business in the US to €12.5 billion in the first half of the year, and a corresponding 3.3% increase in the German domestic business to €4.8 billion. The company is set to release new financial figures later this week.
With Google Cloud's potential to fuel the growth of Deutsche Telekom, the German communications conglomerate seems well-positioned to continue its successful journey.
A Closer Look at the Partnership
The partnership between Google Cloud and T-Systems is extensive, with multiple facets impacting both companies' growth and profitability in the German cloud market. Besides cloud solutions, the collaboration extends to AI advancements, network integration, and the development of a new AI-powered platform called the "One Data Ecosystem."
Google Cloud's involvement in this partnership will help it penetrate the German and European cloud market, utilizing T-Systems' infrastructure and customer base. Meanwhile, Deutsche Telekom will reap the benefits of AI and cloud technology, enhancing its market position and driving growth in the competitive telecommunications sector.
[1] Vontobel Research (2021). Google Cloud and T-Systems partner to build sovereign cloud offerings in Germany. Retrieved from www.vontobel.com/insights
[2] Investor Relations (2021). Google Cloud and T-Systems: Joint projects in Germany and Austria. Retrieved from www.telekom.com/investor-relations
[3] TechRepublic (2021). Deutsche Telekom to host its 5G core on Google Cloud. Retrieved from www.techrepublic.com
[4] The Parliament (2021). The rise of sovereign cloud computing in Europe. Retrieved from www.theparliament.co.uk
[5] Deutsche Telekom (2021). A closer look at the Google Cloud partnership. Retrieved from www.telekom.com
Conflict of Interest Disclosure The CEO and majority shareholder of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has entered into direct and indirect positions in the financial instruments mentioned in the publication or related derivatives, which could benefit from the price development resulting from the publication.
- Google's cloud division and Deutsche Telekom's subsidiary, T-Systems, have partnered to serve sectors like finance, government, and healthcare in Germany, with a focus on cloud solutions.
- As part of this agreement, both companies are testing network services, such as 5G offerings in Austria and data roaming solutions, with Deutsche Telekom leveraging Google Cloud's expertise to analyze its networks more thoroughly.
- The collaboration between Google Cloud and T-Systems extends to AI advancements, network integration, and the development of a new AI-powered platform called the "One Data Ecosystem," aiming to help both parties penetrate the German and European cloud market.
- Deutsche Telekom, with Google Cloud's potential investment, appears well-positioned to drive growth and enhance its market position in the competitive telecommunications sector, particularly in the German cloud market where they aim to catch up with powerhouses like AWS and Azure.
