KT unveils the rational of the $1.81bln Microsoft partnership

Seoul, South Korea - KT Corp (030200. KS) and Microsoft Corp (MSFT.O) announced a KRW 2.4 trillion (US$1.81 billion) strategic alliance for artificial intelligence (AI) and cloud services at a press conference on Thursday.

At the Novotel Ambassador Seoul Dongdaemun event, KT CEO Kim Young-shub and other executives detailed the five-year partnership.

"About 50% of the investment, roughly KRW 1.2 trillion (US$906 million), will go towards infrastructure such as GPUs and data centers," said Woo-jin Jung, KT's executive vice president of consulting.

KT plans to launch a GPT-4-based Korean AI model in H1 2025 alongside industry-specific models using Microsoft's Phi 3.5.

CTO Oh Sung-pil told reporters, "Technical aspects are nearly complete. The challenge now lies in regulatory compliance."

Kim emphasized the partnership's focus on developing AI tailored to Korean culture and knowledge. "We aim to create an AI ecosystem that contributes to national competitiveness," he said.

The companies will establish an 'AX (AI transformation) specialist company' in Q1 2025, aiming to provide global-level consulting and design services for AI implementation.

KT Cloud CEO Ji-woong Choi addressed concerns about the partnership's impact on KT's existing cloud services. "This collaboration provides a growth foundation, expanding our service portfolio and customer options," he stated.

Oh outlined plans for a public and financial sector cloud service, targeting commercialization in Q1 2025. "We're in discussions with 2-3 large corporations, 1-2 financial institutions, and public sector entities," he revealed.

When asked about overseas expansion, Kim stated, "While aligned with long-term goals, we'll first focus on building domestic capabilities."

The partnership also includes plans to establish a joint 'Innovation Center' next year, focusing on AI and future network research.

Microsoft Korea CEO Willy Cho highlighted the alliance's potential: "Solutions developed for Korea could aid Microsoft's expansion into new markets beyond Korea."

KT maintained that network infrastructure investment would remain the same, emphasizing plans to incorporate AI for network quality improvement and stable operations.

Through this partnership, KT aims to achieve cumulative sales of KRW 4.6 trillion (US$3.47 billion) by 2029, with projected sales of KRW 1.3 trillion (US$981 million) in 2028 and KRW 1.37 trillion (US$1.03 billion) in 2029.