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Microsoft to Acquire Cloud Communications Specialist Metaswitch Networks

By Herve Blandin - May 14, 2020 at 12:50PM

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This acquisition will increase Microsoft's footprint in 5G.

Microsoft (MSFT -0.26%) is moving to expand its cloud communications portfolio. The tech giant announced today that it has signed a definitive agreement to acquire cloud communications specialist Metaswitch for an undisclosed amount.

Metaswitch provides cloud-based voice, data, and communication software solutions for telecommunication providers. Its portfolio includes products that address the 5G market, which confirms Microsoft's commitment to that mobile technology. Last month, Microsoft announced its plan to acquire mobile telecommunications specialist Affirmed Networks for its cloud-based 4G and 5G software solutions.

Yousef Khalidi, corporate vice president of Azure networking, today confirmed the company's focus on 5G, saying in a blog post: "As the industry moves to 5G, operators will have opportunities to advance the virtualization of their core networks and move forward on a path to an increasingly cloud-native future. Microsoft will continue to meet customers where they are, working together with the industry as operators and network equipment providers evolve their own operations."

Artist's rendering of a cloud in a room of computer servers

Image source: Getty Images.

Leveraging Azure with a growth opportunity

Microsoft will leverage its cloud platform, Azure, to scale and deliver Metaswitch's and Affirmed Networks' software solutions. But Microsoft also said it would continue to support its hybrid and multicloud model, which suggests the acquired technologies will remain available on competitors' clouds, such as Amazon's Amazon Web Services (AWS). In addition, cross-selling opportunities between both acquired companies will materialize as they propose complementary solutions for telecommunication providers.

Looking forward, this acquisition will increase Microsoft's exposure to 5G. And with its large total of cash and investments of $137 billion,, and its total debt of only $69.6 billion at the end of last quarter, the software company may not be done with transactions in this growth area.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Herve Blandin has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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