Microsoft Corp. will provide cloud infrastructure and productivity services to AT&T Inc. as part of a broad, multiyear agreement the companies announced this morning.

The deal is worth more than $2 billion, a source familiar with the matter told CNBC. It comes a day after AT&T announced a separate multibillion-dollar contract with IBM Corp. for cloud infrastructure and professional services.

The two deals cover different parts of the carrier’s operations. IBM will mostly work with AT&T Business Solutions, the division that serves corporate customers, while Microsoft will provide solutions to entire AT&T Communications LLC organization. It’s the parent entity of AT&T’s core telecommunications business but doesn’t include the recently acquired WarnerMedia group.

Under the deal, Microsoft’s Azure will become the carrier’s preferred cloud platform for workloads that don’t relate to its network infrastructure. AT&T is also set to migrate “much” of AT&T Communications’ 250,000-person workforce to Microsoft 365.

Microsoft 365 is a product bundle that includes Windows 10, the Office 365 productivity suite and certain cybersecurity tools. Among them is the artificial intelligence-powered Azure Advanced Threat Protection service for fending off hacking attempts. There are also specialized versions of Microsoft 365 that provide more niche features, such as tools for protecting confidential documents.

“Together, we will apply the power of Azure and Microsoft 365 to transform the way AT&T’s workforce collaborates and to shape the future of media and communications for people everywhere,” said Microsoft Chief Executive Satya Nadella (pictured, left, next to AT&T Communications counterpart John Donovan.)

The agreement also has a go-to-market component. Microsoft and AT&T plan to develop joint solutions that will pair Azure with the carrier’s network services. Specifically, the focus is on the high-speed 5G infrastructure the carrier is in the process of deploying, which will deliver connections 10 to 100 times faster than current 4G hardware.

Microsoft and AT&T said their solutions will span areas such as collaboration, AI and cybersecurity but didn’t go into detail. They have, however, previously shared information about some existing projects. The companies are among others collaborating with an Israeli startup called VigilAir to build a cloud-powered system for monitoring drone traffic.

For Microsoft, the AT&T deal represents a big expansion of its presence in the telecommunications market. The company’s other cloud customers in this sector include Swedish mobile network operator Telia Company AB and Spain-based Telefónica SA, which is one of the world’s largest carriers.

Photo: Microsoft