KT and Microsoft team up for Korean AI and cloud push

This deal is expected to involve the development of customised AI models and services tailored for Korea, the launch a Korean-specific public cloud, the establishment of an ‘AI transformation specialised service company’, joint AI R&D and investments in startups, and promoting talent development programs.

The scale of the deal is expected to reach several trillion KRW, including a usage fee of $450 million for Microsoft to utilise KT and KT Cloud infrastructure.

KT plans to develop customized AI models based on Microsoft software, including ChatGPT 4o and Phi 3.5. These AI models will be co-developed and rolled out to KT's customer services (such as chatbots) and industry-specific AI solutions for B2B sectors, says the announcement.

They will develop cloud services aimed at the public and financial sectors, based on cloud and AI features on Azure, pitching that they will help customers in those sectors comply with local privacy and regulatory requirements.

KT will also establish a new ‘AX-specialised service company which will provide Microsoft Cloud and AI expertise and solutions to the Korean market.’ There are also plans to expand this to other markets, including ASEAN. Microsoft will back this up over the next three years with consulting resources.

Meanwhile a newly set up ‘co-innovation centre’ will be aimed at helping businesses build, develop and prototype new AI solutions with Microsoft technology and KT’s AI specialists. KT will invest in new AI startups and develop a partner ecosystem to support ‘nationwide AI transformation.’

The deal will also involve an upgrade of KT’s overall IT infrastructure, plugging in Microsoft 365 Copilot and GitHub Copilot for all its employees and developers. Microsoft will school more than 19,000 KT employees with cloud and AI skills, we’re told.

“The partnership with Microsoft presents a pivotal opportunity, not only for technological collaboration but also for expanding Korea’s AI foundation and driving transformative innovation across industries and daily life,” said KT CEO Young-Shub Kim. “Leveraging this strategic partnership, we aim to rapidly evolve into an AICT company with unparalleled competitiveness in domestic and global markets.”

Satya Nadella, Chairman and CEO of Microsoft added: “Our strategic partnership brings together KT’s industry expertise with the power of our entire tech stack, from Azure AI to Microsoft 365 Copilot. Together, we will help accelerate the AI transformation of Korean organizations across the private and public sector and build new AI-powered experiences for millions of consumers.”

The deal will also involve an upgrade of KT’s overall IT infrastructure, plugging in Microsoft 365 Copilot and GitHub Copilot for all its employees and developers. Microsoft will school more than 19,000 KT employees with cloud and AI skills, we’re told.

Last year, KT said it expects to plough $5.4 billion into its AI business by 2027, and that it plans to scale up its activities in the robotics, healthcare and education sectors, creating separate business units to each vertical.