AT&T Inc. (T) sued Broadcom Inc. (AVGO) on Aug. 29, 2024, over support for its VMware software, according to TechTarget. The carrier said its contract gave it the option to renew support for two more years. Broadcom would only continue supporting AT&T through new subscription packages requiring three-year contracts, AT&T alleged. At a hearing on Oct. 23, 2024, AT&T’s lawyer said the carrier would seek to leave VMware over licensing and cost changes. “Without the threat, there’s really no way Broadcom will become more reasonable,” he told the court. The two sides reported a settlement in principle that December, without disclosing terms. Now another telecom giant is heading the other way. NTT DOCOMO, the mobile arm of Japan’s NTT, has signed a 10-year deal to keep its private cloud on VMware Cloud Foundation, according to a Broadcom press release on Oct. 19, 2026. The length is the surprise. Forrester analyst Naveen Chhabra told TechTarget that most customers would sooner reduce their VMware dependence over time than fight. DOCOMO just committed for a decade. Also read: Elon Musk takes a direct swipe at Broadcom CEO and AI investors DOCOMO bought the whole bundle, not a sliver Financial terms were not disclosed. A footnote in the release spells out the scope, and it caught my eye. DOCOMO is taking Cloud Foundation plus VMware’s load balancing, vDefend security, and its Tanzu app platform. It also gets dedicated account managers and VCF Forte Support, which carries Broadcom’s strictest service targets. To me, that reads like the showcase Broadcom has wanted since it folded VMware’s catalog into two main bundles, as TechTarget confirmed. The container piece matters more than it looks. DOCOMO will run virtual machines and containers on one platform using VMware’s own Kubernetes service, according to the release. A carrier modernizing its software could have used that shift to walk away, and DOCOMO chose to stay. NTT DOCOMO signed a 10-year VMware Cloud Foundation deal with Broadcom, the company’s first agreement of its kind in Japan, according to Broadcom. NurPhoto / Getty Images The same outage fear pushed AT&T and DOCOMO apart AT&T’s lawsuit leaned on one warning. Its lawyers argued that losing VMware support could knock out vital systems for public safety agencies, according to TechTarget. VMware, in other words, was too embedded to unplug quickly. DOCOMO’s priorities read as that same worry turned into a purchase. The carrier wants to upgrade systems without interruptions and hold quality steady through traffic spikes. “VMware products have long been used across a range of our systems,” said Hiroshi Ishimaru, a DOCOMO general manager, in the release. That is the uncomfortable math for VMware’s critics. The deeper the software sits inside a network, the riskier a migration looks. DOCOMO has built its private cloud with VMware since 2019, the release said, so this extends a seven-year bet. The deal gives Broadcom stock a steadier software anchor Broadcom stock mostly trades on AI chips. AI semiconductor revenue hit $16.7 billion in the fiscal third quarter, more than triple the year-earlier figure. That growth is why investors scrutinize every big cloud order. Software is the quieter half. Infrastructure software revenue rose 29% to $8.75 billion in the same quarter, the release showed. Its share of total sales fell to 30% only because chip sales grew far faster. More Broadcom: Jim Cramer sees something Wall Street may be missing in Broadcom Broadcom CEO echoes Warren Buffett with warning for investors A $10,000 Broadcom investment in 2016 now pays $1,991 a year in dividends This deal helps that half in two ways. A decade of committed licensing and premium support should mean predictable revenue to cushion a lumpy chip cycle. It also hands Broadcom’s sales team a marquee carrier to cite when other operators renew. AI links the two halves. CEO Hock Tan told analysts in June that processors sold alongside AI chips are “driving some accelerated growth of our VMware business.” DOCOMO’s plan to run future AI workloads on the same platform fits that thesis and the shift toward private clouds for AI. Investors have not rewarded the story yet. Broadcom shares were little changed early on Tuesday, Oct. 20, according to StockAnalysis. The stock sits roughly a third below its 52-week high. Even so, the site shows a Strong Buy consensus from 50 analysts. One contract will not move a company that reported $29.6 billion in sales last quarter. I would treat it as a sales tool rather than a revenue event, and that may be worth more. Long commitments could become VMware’s real moat The VMware debate has mostly focused on who leaves. For investors, the sharper test is how long the customers who stay will commit. DOCOMO’s answer stretches past its next network upgrade. The release says the platform is meant to evolve with AI-driven threats, 6G and IOWN, NTT’s next-generation optical network project. That is a carrier planning around technology still years from wide use, with VMware at the center. If other carriers follow, the AT&T fight will look less like an exodus and more like a test of leverage. The next big telecom renewal will show which reading is right. More Stocks News Liquid AI CEO says AI’s next big opportunity may be hiding inside your car GM shares are on sale for investors willing to buy into weakness, analyst says Morgan Stanley sees new hurdle for Microsoft stock Vanguard’s S&P 500 fund outruns its own rising dividend
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