Telefónica and Indra are exploring setting up a joint venture to offer sovereign cloud services built mostly on European technology and infrastructure, aimed at public administrations, governments, and critical infrastructure. Bloomberg broke the story on October 23, and sources familiar with the matter later confirmed it to Europa Press. Talks are at an early stage: Indra describes them as exploratory, and Telefónica has declined to comment. The move comes after years in which the carrier has built much of its cloud business alongside the big U.S. providers.
Telefónica and Indra’s sovereign cloud in 20 seconds
- Telefónica and Indra are exploring a sovereign cloud joint venture built mostly on European technology for government and critical infrastructure.
- They’d only use non-EU GPUs when there’s no European alternative; talks remain preliminary.
- Telefónica has for years hosted Microsoft’s, Google’s, and Oracle’s cloud regions in Spain.
According to the reports, the deployment would rely mainly on European technology and would only turn to non-EU providers for specialized graphics processing — GPUs, in other words — when no equivalent European alternative exists. The cloud would be designed to guarantee data control and residency within the European regulatory framework. The Spanish state sits on both sides of the table: SEPI is Indra’s largest shareholder, with 28%, and holds 10% of Telefónica, where it shares the role of reference shareholder with STC and CriteriaCaixa. That’s why the government’s backing for the alliance is widely assumed. It isn’t the first approach: back in April it emerged that the two companies were already discussing collaborating on cyberdefense with a model similar to the Tess Defence consortium.
A decade of homegrown cloud that never took off
Telefónica isn’t new to cloud, but it does carry a mixed record with its own projects. In 2012 it launched Instant Servers, a public cloud built on Joyent’s technology, and in 2016 it unveiled Open Cloud, its OpenStack-based public cloud offering, alongside Cloud Server on a Huawei platform, for Brazil, Chile, and Mexico. None of those efforts became a real alternative to Amazon Web Services, Microsoft Azure, or Google Cloud, which captured most of the market during those same years.
The pivot became clear in 2019, when Telefónica sold 11 data centers across seven countries, two of them in Spain, to the fund Asterion Industrial Partners for €550 million, booking a gain of around €260 million. It kept the services and customers through a hosting contract but stopped owning those buildings. From there came the deals with the hyperscalers. In February 2020, Microsoft announced a data center region in Spain that would use Telefónica’s infrastructure, and the carrier also picked Microsoft as its strategic cloud partner for its own internal IT. Google Cloud followed in June 2020, with a region in Madrid built on the carrier’s infrastructure. And in September 2022 Oracle opened its Madrid region inside Telefónica’s facilities.
The same pattern has continued this year. In May, Telefónica and Google Cloud announced a sovereign cloud offering in which the carrier manages encryption keys from its own cloud and acts as Google’s sovereignty partner in Spain. And in July, Telefónica won an €89.1 million contract from the Ministry of Defense to supply Microsoft software licenses between 2026 and 2029. The pattern looks more like an integrator and reseller of American platforms, adding value through its network and facilities, than a cloud provider with its own technology.
Why now: Brussels is changing the rules
The regulatory backdrop explains much of the interest. The European Commission proposed the Cloud and AI Development Act (CADA) on June 3, which creates four assurance tiers for providers working with the public sector. U.S. hyperscalers can fit into the first two if they keep data, staff, and infrastructure in the EU and lock down access from third countries. Tiers 3 and 4, meant for the most sensitive areas, require the provider to be European-owned and -controlled. The rule is still a proposal and has to be negotiated with the European Parliament and the Council, but if it goes through with that structure, sovereign offerings built on Google or Microsoft wouldn’t be enough for defense, national security, or certain critical infrastructure.
Telefónica is already moving in that direction through other channels. In March it unveiled EURO-3C at Mobile World Congress, a European Commission-backed project to federate national cloud, edge, and AI infrastructure, which Capgemini later joined. And in January it announced it would have 17 edge nodes at telephone exchanges across Spain, with GPU as a service. At the same time, the company is in the middle of reorganizing and cutting costs around its technology infrastructure bets.
What could come out of this
On paper, the combination makes sense: Telefónica brings network, data centers, and relationships with large customers, while Indra, through Minsait, brings experience in public administration, defense, and systems integration. With SEPI in both companies and a future European rule that could reserve the most sensitive contracts for European providers, there’s a clear potential market. The unknowns are many, though. The investment, the ownership split, the specific technology, and the timeline are all unknown, and Indra itself describes the contacts as exploratory. It’s also unclear how the new company would coexist with the alliances both companies already have with the hyperscalers: Minsait has also offered sovereign cloud with Google Cloud since 2021.
The other challenge is technical. Building a competitive cloud without relying on American software requires mature European platforms, dedicated teams, and years of investment — exactly what didn’t pan out in Telefónica’s earlier attempts. Europe’s market already has European-owned infrastructure and private cloud providers, such as OVHcloud or Stackscale, part of Grupo Aire, and there’s an open debate over how far sovereignty really goes when the software underneath is still American, as is the case with AWS’s European sovereign cloud. The most likely scenario in the short term is a mixed model: a European cloud for the state’s most sensitive workloads and hyperscaler offerings for the rest. If the joint venture does get set up, the test will be whether it wins contracts that today go to Microsoft, Google, or AWS, or whether it ends up as just another brand on the same underlying technology.
Frequently asked questions
What are Telefónica and Indra preparing?
They’re exploring setting up a joint venture for sovereign cloud built mostly on European technology, aimed at administrations, governments, and critical infrastructure. Talks are preliminary.
What’s Telefónica’s relationship with the hyperscalers?
Since 2020 it has hosted Microsoft’s and Google’s cloud regions in Spain on its own infrastructure, and Oracle’s since 2022. In 2026 it launched a sovereign cloud offering with Google Cloud.
What is the Cloud and AI Development Act?
A European Commission proposal from June 2026 that sets four sovereignty tiers for cloud providers serving the public sector. The two strictest tiers require European ownership and control.
Why is the Spanish state in both companies?
SEPI holds 28% of Indra, where it’s the top shareholder, and 10% of Telefónica.
Sources:
- Capital (Europa Press): Telefónica e Indra estudian crear una empresa conjunta para ofrecer servicios de nube soberana
- Telefónica: sale of 11 data centers to Asterion (2019)
- Microsoft: new region in Spain and partnership with Telefónica (2020)
- Telefónica: alliance with Google Cloud and the Madrid region (2020)
- Telefónica: sovereign cloud with Google Cloud (May 2026)
- Telefónica: launch of Open Cloud and Cloud Server (2016)
- Inside Global Tech: The EU Cloud and AI Development Act in depth
- Euronews: Telefónica launches a federated cloud and AI model (EURO-3C)
