KT, Microsoft collaborate on AI technology

KT CEO Kim Young-shub (right) and Microsoft CEO Satya Nadella are shaking hands after signing a strategic partnership at Microsoft’s headquarters in Redmond, Washington, on the 27th. (KT)

South Korean mobile carrier KT Corp. will establish a comprehensive collaboration system with Microsoft Corp. in the field of artificial intelligence (AI).

The duo will jointly develop a Korean AI model and cloud services as well as creating a new corporation to support businesses in their AI transformation (AX), all aimed at penetrating both the Korean and international markets.

KT announced on Sunday that it signed a strategic partnership with Microsoft on Friday at the Microsoft headquarters in Redmond, Washington to collaborate and share business capabilities in the AI, cloud, and information technology (IT) sectors.

The contract period is five years, although the specific cooperation details were not disclosed.

“The supply contracts for infrastructure, including data centers, amount to $450 million,” a source familiar with the matter said. “Together with research and development and personnel exchanges, the total amount is estimated to hit several trillion won.”

This partnership agreement is a tangible outcome four months after KT CEO Kim Young-shub and Microsoft CEO Satya Nadella established a business collaboration relationship in early June.

KT and Microsoft initially agreed to co-develop AI models that are optimized for Korean culture and industry using OpenAI’s conversational AI model GPT-4o and Microsoft’s small language model, Phi. This customized AI model will be used not only for KT’s customer service chatbots but also for industry-specific AI solutions for business-to-business customers.

KT and Microsoft plan to collaborate from the initial testing and application phases of the AI model to launch services that reflect Korea’s unique language and culture. KT will also incorporate Microsoft’s conversational AI Copilot into its services. The two companies will also jointly develop public cloud services using Microsoft’s Azure.

Korean companies in sensitive sectors such as public and finance, which are subject to regulatory conditions and security concerns, are seen as major potential customers. KT aims to expand the domestic cloud market while ensuring compliance with personal data protection and regulatory requirements by leveraging Microsoft’s latest AI and cloud capabilities.

KT also plans to form a new specialized company for AI transformation. This newly formed entity will consist of professionals in AI, cloud, and IT, offering one-stop services that enable customers to create AI-usable environments based on KT’s IT capabilities and Microsoft’s AI and cloud platforms. For its part, Microsoft will provide specialized personnel for three years and will jointly carry out actual projects on-site.

The goal is to expand the business not only in Korea but in the Asian and global markets as well.

KT will also pursue joint research projects on new AI technologies and future networks in collaboration with Microsoft’s research center. To facilitate this, KT plans to create an Innovation Center in its Gwanghwamun building in central Seoul.

A joint training program will also be implemented to cultivate globally competitive AI talent.

“The partnership with Microsoft is not just a technical collaboration,” Kim said. “It will broaden AI’s foundation in Korea as well as accelerating innovation across all industries and daily life.”