Korean telecom carriers bolster startup collaborations

South Korea’s three major telecommunication companies—SK telecom Co., KT Corp., and LG Uplus Corp.—are expanding their collaboration with domestic startups via investments and strategic partnerships, aiming to diversify their business areas and seek synergy with startups with promising new technologies.

According to industry sources on Tuesday, the three major telecommunications companies continue to cooperate on expanding investments in domestic startups. LG Uplus, for example, significantly increased its startup investment over the past two years, with a 100 billion won ($75.8 million) investment in startups from 2022 to 2023, nearly quadrupling the amount from the previous two years.

SK telecom’s focus on startup investment lies in enhancing AI competitiveness. Most startups that the telecommunications company has invested in since 2022 are AI companies, with the 22.4 billion won investment in Konan Technology Inc. in 2022 a notable example. Konan Technology is a local AI company that develops its own large language model (LLM), Konan LLM.

SK telecom accelerated steps to build AI startup allies in 2023 by officially launching the “K-AI Alliance” at that year’s Mobile World Congress (MWC). Notably, it invested 15 billion won in Scatter Lab Inc., the developer of AI chatbot Luda, to integrate the tool into its own AI service, A dot.

Aiming to increase the AI revenue share to 36 percent by 2028 via startup partnerships from 2023’s figure of about 9 percent, the company is anticipated to expedite its efforts to obtain notable achievements in performance. SK telecom Earlier implied the potential possibility of monetizing the A dot service during its third-quarter earnings conference call in 2023.

KT invested 30 billion won in AI semiconductor company Rebellions Inc. in 2022, followed by investments of 10 billion won each in AI startups Upstage Co. and Mathpresso Inc.’s Qanda in September 2023. KT outlined plans to monetize its hyperscale AI model, Midm, after unveiling it in October 2023, aiming for Midm’s revenue to hit 100 billion won in three years and non-telecom sector revenue to account for 50 percent of the total revenue by 2025.

The company intends to target the business-to-business (B2B) market by developing specialized LLMs via collaborations with startups. While collaborating with Rebellion, KT invested an additional 15 billion won in Moreh Inc. in 2023 to offer AI infrastructure to corporates and develop a billing model through its cloud services. “For telecom companies, securing AI capabilities, especially in AI customer service, is crucial,” an AI industry insider said. “That is why telecom companies are trying to ally with promising startups, to secure AI capabilities.”

In contrast to SK Telecom and KT’s focus on AI, LG Uplus has diversified its investments across various fields, including lifestyle, entertainment, and education, as part of the 4-platform strategy it presented in 2022. The company is expanding its collaborations to achieve its goal of expanding non-telecom revenue to 40 percent by 2027.