• Sovereign cloud and AI services are attracting more resources and strategic attention at European telcos
• That focus has led to a shift in digital services strategy at A1 Telekom Austria
• It has sold its fintech services business and teamed up with Microsoft to bolster its sovereign cloud proposition to European enterprises

The digital services strategies of telcos are constantly in flux and vary from market to market and region to region. The latest operator to revamp its digital services strategy is A1 Telekom Austria, which has operations across central and eastern Europe as well as in its domestic market, and which has just exited the fintech sector after more than 20 years of operations while at the same time teaming up with Microsoft for the launch of a new cloud region (group of interconnected facilities) in Austria. 

First, the fintech change of heart… In what it describes as a “strategic portfolio adjustment”, A1 has sold A1 Bank, which offers a range of mobile commerce and banking services, such as credit cards and vouchers, to Czech firm Direct Group for an undisclosed sum. For the Direct Group, the move “represents an important milestone” in the company’s regional expansion and “is a strategic step towards building a strong pillar in financial services – with a focus on modern, technology-enabled solutions for small and medium-sized enterprises in Austria and throughout central and eastern Europe.”

But for the telco, A1 Bank was no longer part of its future plans. “I am pleased that we can open the next chapter of our financial services strategy with the sale of A1 Bank,” stated Thomas Arnoldner, deputy CEO of the A1 Group, in this recent announcement (in German). “As part of an internal assessment, we determined that A1 Bank’s current portfolio is no longer strategically relevant for A1 Austria’s core business,” though “A1 will continue to be active in the financial services sector through selected partnerships.”

A1 isn’t the only European telco to have ventured into fintech only to find it wasn’t key to its future: Orange handed over its banking operation to BNP Paribas in a deal agreed in 2023 and concluded in 2024. 

Sovereign services are all the rage 

Like Orange, A1 regards the provision of sovereign digital services (cloud, AI) to enterprise customers as more strategic. 

A1 Telekom Austria already has a position in the burgeoning European sovereign cloud sector through the Exoscale unit of its A1 Digital division – Exoscale has datacentres located in Switzerland, Germany, Austria and Bulgaria. 

And now it’s the official launch partner for the new Microsoft Cloud Region Austria East which, from three datacentre facilities, “offers Austrian companies and organisations access to a locally anchored infrastructure for the entire spectrum of Microsoft cloud services – including Azure, Microsoft 365, Dynamics 365, and Power Platform.”

A1 announced (in German) that it is “supporting the launch with three tailor-made solutions for the domestic market,” namely A1 Cloud Connect ExpressRoute (direct network connections to Microsoft’s datacentres with guaranteed bandwidth and redundancy), A1 Virtual Desktop (desktop-as-a-service solution based on Microsoft Azure Virtual Desktop with data stored in Austria and IP usage regional), and A1 Cyber ​​Defense Center (24/7 protection against cyberattacks based on Microsoft Sentinel and operated from an A1 Cyber ​​Defense Hub). The telco also offers to help Austrian companies repatriate existing Azure resources from other regions to the new domestic cloud region.

“Global public cloud providers like Microsoft are an important part of the cloud and data strategy for many Austrian companies,” stated Richard Palmetzhofer, A1 director of business area, which provides services to more than 16,000 business customers. “With the new Microsoft Zone Austria, our customers can now store and manage their data directly in Austrian Microsoft datacentres,” he added. 

It’s worth noting that in order to placate lawmakers and potential partners and customers alike, the main hyperscalers have been highlighting their support for European companies and institutions of late so as to not to lose out on sovereign cloud/AI business opportunities in the region: Amazon Web Services (AWS) recently unveiled an independent European governance structure for the AWS European Sovereign Cloud; Google reiterated its “enduring commitment to Europe” during the recent EU Digital Summit; and Microsoft committed $400m to sovereign infrastructure investments in Switzerland. 

- Ray Le Maistre, Editorial Director, TelecomTV