Microsoft Corp. hopes to make its Azure cloud platform more attractive for telecommunications companies through the newly announced acquisition of Metaswitch Networks Ltd., a veteran provider of network management software.

Yousef Khalidi, corporate vice president of Azure networking, disclosed the deal in a blog post today. The company is not sharing the financial terms, but given that Metaswitch reported revenues of $180 million for the 2019 fiscal year, the deal’s price tag is likely at least in the nine figures.

U.K.-based Metaswitch was founded in 1981, four years before Microsoft introduced Windows, and over time has positioned itself as a major software supplier to the telecommunications sector. The firm claims more than 1,000 service provider customers as of 201, including big names such as Sprint.

Metaswitch’s product portfolio aligns well with Microsoft’s carrier strategy, which focuses partly on easing the transition to 5G for service providers. The British firm has a software platform called 5G Core for powering the network core, or backbone, of next-generation wireless networks. The platform can be deployed on public clouds such as Microsoft’s Azure using Kubernetes and software containers.

Over its four decades in operation, Metaswitch has also built a broad array of other software products. The firm provides software that helps carriers manage their on-premise infrastructure, tools for diagnosing network issues and a robocall blocker, among many other offerings. The acquisition will enable Microsoft to compete not only for 5G projects but also help carrier customers with many other aspects of their infrastructure operations.

Though Microsoft’s main focus will be using Metaswitch to enhance Azure, the company stressed that it will also accommodate carriers running the British firm’s products in other environments, such as on-premise data centers. 

“We will continue to support hybrid and multi-cloud models to create a more diverse telecom ecosystem and spur faster innovation, an expanded set of unique offerings and greater opportunities for differentiation,” Khalidi wrote in the blog post. “A future that is interoperable has never been more important to ensure the success of customers and partners.”

The  purchase of Metaswitch is Microsoft’s second blockbuster telecommunications acquisition this year. It previously acquired Affirmed Networks Inc., a maker of software for building and managing 5G wireless networks, in a deal that was reportedly worth $1.35 billion. 

“Microsoft is becoming a telco network powerhouse with a relentless appetite for acquisitions,” said Don Alusha, principal analyst at technology market advisory firm ABI Research. “The acquisition of Metaswitch follows their recent acquisition of Affirmed Networks and extends Microsoft’s cloud expertise to the telecoms domain —  blurring the lines between webscale companies and telecom operators. Microsoft’s expertise in cloud infrastructure, and now specialized cellular network technology, will likely create major competition to established vendors.”

Microsoft is combining its acquisitions of established carrier software providers with in-house development efforts. In March, the company unveiled Azure Edge Zones, a series of edge computing systems that network operators can deploy inside their data centers to host applications for their enterprise customers. Cloud rival Amazon Web Services Inc. has a competing offering called Wavelength.

Photo: Microsoft