March 27, 2017

CeBIT Tech Show Hanover - Alibaba Cooperation Could Re-Open China for Vodafone

By Hartmut Leuschner
Participants at CeBIT last week said they believe Vodafone may be trying to leverage its cloud partnership with Alibaba in Europe to enter the Chinese data center market.

Unique Opportunity for a Foreign Carrier
Telecom sources interviewed during the CeBIT Tech Show in Hanover, Germany, believe Vodafone Group plc may leverage its partnership with Alibaba Group Holding Ltd. in Europe to gain a foothold in China's telecom market. Alibaba entered the European public cloud market late last year via a Vodafone-hosted data center in Frankfurt. A cloud consultant said, "This will go both ways for sure, and I believe Vodafone will take that opportunity to position itself as data center and cloud provider for foreign companies with operations in China -- helped by Alibaba." Another source, a cloud reseller, thinks this is a unique opportunity for a non-Chinese network operator to get meaningful business in China. "So far it is pretty difficult to get through the Great Wall of China in telecom terms, but if Vodafone gets Alibaba's business going in Europe and other places with Vodafone presence, they will be their ideal partner to get China going for them; none of the foreign network operators was so far able to do that." 

Announcements Possible in 2Q17
Two sources, an infrastructure provider and a technical consultant, said they believe Vodafone is already preparing its entry and is expected to start offering a special packet for cloud services in China this year. Although there is no China cloud product officially available by Vodafone yet, a data center specialist at the event said he believes a launch is very likely even though he expects several bureaucratic and regulatory hurdles before the deal can get through. "I think if companies are accepting an Alibaba cloud in Europe, hosted by Vodafone, they might start liking the idea of using Vodafone to deal with their cloud demand in China as well." One source said announcements could come by mid-May, when China celebrates its national telecom day. It remains unclear, however, whether the entry into China would initially be limited to some branches of Vodafone, such as Vodafone Germany, or whether the global operations could get behind such deals.