KT Corporation and Microsoft have embarked on a transformative five-year, multibillion-dollar strategic partnership aimed at catalyzing AI-driven innovation throughout Korea. This ambitious collaboration seeks to facilitate the deployment of advanced AI technologies across over 650,000 businesses and 17 million consumers, fostering the integration of AI-enabled services in both the public and private sectors. Central to this partnership is the development of a bespoke AI model tailored for Korea, utilizing the Azure OpenAI Service to unlock novel use cases across critical industry verticals, including finance, healthcare, and manufacturing.

The strategic alliance also encompasses the creation of a sovereign cloud infrastructure specifically designed to meet the regulatory and privacy requirements of Korean public sectors and other regulated industries, thereby extending KT’s digital capabilities in cloud technology. As part of the agreement, KT will establish a specialized AI transformation (AX) service company, focused on delivering Microsoft-powered AI solutions to enterprise customers. This new venture is poised not only to reinforce KT’s current operations but also to create avenues for future growth through the integration of Microsoft’s state-of-the-art AI tools. The collaboration also aims to amplify research and development (R&D) efforts and accelerate the advancement of KT’s AICT (AI and ICT) infrastructure, solidifying KT’s position as a key player in the AI-driven digital economy.

Development of Customized AI Solutions for Korean Markets

KT and Microsoft are collaborating to engineer a customized version of GPT-4o, explicitly tailored to meet the linguistic, cultural, and industrial needs of Korea. This venture underscores the commitment to localizing AI solutions that reflect the complexities of Korean societal and economic dynamics. The initiative includes the development of Microsoft’s Phi family of smaller language models, with a specific focus on addressing KT’s internal requirements while also providing industry-specific consumer applications. The amalgamation of KT’s regional expertise and Microsoft’s technical capabilities will drive the development of sophisticated AI-driven solutions for various sectors, including finance, healthcare, and entertainment, thereby addressing specific needs of the Korean market.

KT will utilize Microsoft Copilot Studio and Azure AI Studio to create bespoke AI agents that are expected to significantly enhance the customer experience across sectors such as education, healthcare, and infotainment, as well as in business operations like human resources and supply chain management. Furthermore, KT and Microsoft will collaborate to enhance KT’s Responsible AI framework to ensure that AI adoption is safe, ethical, and transparent, addressing key considerations such as bias mitigation, fairness, and data privacy.

Shinhan Bank, a major financial institution in Korea, expressed confidence in this partnership, emphasizing that KT’s AI model, tailored specifically for financial services, would markedly improve the digital competitiveness of the domestic financial industry. Shinhan Bank representatives highlighted that the integration of KT’s AI technologies will enable the provision of more personalized banking services, enhance operational efficiency, and elevate customer experiences, thus establishing new standards in financial service delivery.

Sovereign Cloud Solutions and Public Sector Advancement

The partnership between KT and Microsoft also involves the development of a Korean sovereign cloud solution built on Microsoft’s Cloud for Sovereignty platform. This initiative is designed to serve Korea’s public sector and other heavily regulated industries, ensuring compliance with local privacy regulations while delivering state-of-the-art cloud and AI functionalities. Microsoft will play a pivotal role in supporting KT in the deployment of Secure Public Cloud services, emphasizing data security, workload protection, and regulatory adherence. The Korean sovereign cloud solution is intended to bolster data sovereignty, positioning it as an indispensable component in the digital transformation journey of the public sector.

The collaboration aims to enable public sector entities and regulated industries to leverage cloud-based AI technologies while maintaining compliance with stringent data privacy requirements. The sovereign cloud initiative will support the provision of AI-enhanced public services, which will contribute to increased transparency, operational efficiency, and accessibility for citizens. Additionally, KT and Microsoft plan to develop sophisticated data analytics capabilities that will support informed decision-making within the public sector by extracting actionable insights from extensive datasets while adhering to local data protection standards.

AX-Specialized Service Company for Accelerating AI Adoption

KT plans to launch a specialized AI transformation (AX) service company that will provide advanced AI and cloud solutions powered by Microsoft to Korean enterprises, with ambitions to expand into ASEAN markets. This entity will serve as a catalyst for accelerating AI adoption in business by offering an end-to-end suite of services—from consulting to implementation—facilitating the integration of AI into core business functions. Microsoft has committed to providing consulting support over the next three years, which will include the dissemination of best practices, technical expertise, and strategic guidance to bolster the capabilities of this new venture, ultimately ensuring that Korean enterprises can seamlessly integrate cutting-edge AI technologies to enhance operational efficiencies and drive innovation.

The AX-specialized service company will concentrate on delivering AI solutions tailored to sectors such as manufacturing, healthcare, retail, and finance, enabling these industries to capitalize on AI for efficiency gains, product innovation, and the creation of new business models. The company will also focus on establishing strategic partnerships with local enterprises and startups, fostering the development of an extensive AI ecosystem, and reinforcing Korea’s standing as a leader in AI-driven technological innovation.

Advancing AI Research and Development Across Korea

KT and Microsoft will jointly establish a co-innovation center that will be instrumental in spearheading AI transformation within Korea, leveraging Microsoft technologies alongside KT’s expertise. This co-innovation center will serve as a nexus for R&D activities, enabling Korean enterprises to create new AI solutions that address both domestic challenges and international opportunities. The facility will provide a platform for prototyping and experimentation, accelerating the development of market-ready AI innovations.

Moreover, KT will invest significantly in nurturing AI startups, with support from Microsoft through Azure credits and technical mentorship. This initiative is expected to invigorate the AI startup ecosystem, playing a crucial role in driving cross-sector innovation. KT and Microsoft Research will collaborate on a series of high-impact research projects, focusing on areas such as AI applications in healthcare, industrial AI adoption, and network modernization. These efforts will also include partnerships with leading academic institutions, aimed at developing breakthrough technologies with the potential for broad commercialization across various industries.

Transforming KT’s AICT Infrastructure and Workforce Upskilling

KT will migrate its existing IT workloads to Microsoft Azure, thereby modernizing its IT infrastructure and adopting a more scalable and secure cloud environment. This transformation will include deploying Microsoft 365 Copilot and GitHub Copilot, aimed at improving workforce productivity and operational efficiency. Furthermore, KT will leverage Microsoft Fabric and Azure OpenAI Service to build a new data platform that will streamline business processes, optimize customer interactions, and foster organization-wide innovation.

KT has also committed to an extensive workforce upskilling program that will see over 19,000 employees trained in AI and cloud technologies, with more than 5,800 AX specialists prepared to lead the transformation initiatives. This commitment includes delivering training through a blend of online modules, hands-on workshops, and collaborative projects, ensuring that employees are fully equipped to utilize AI technologies effectively. This workforce development initiative is a fundamental aspect of KT’s broader AICT transformation strategy, enabling the company to adapt to the rapidly evolving technological landscape and maintain a competitive advantage.

KT CEO Young-Shub Kim underscored the significance of this partnership as a transformative milestone for the Korean technology sector, emphasizing that the collaboration would rapidly propel KT into becoming a dominant AICT enterprise with exceptional competitiveness. He further highlighted that focusing on AI-driven transformation, cloud innovation, and workforce development would place KT at the vanguard of the digital revolution, both domestically and globally. Microsoft CEO Satya Nadella echoed this perspective, noting that the strategic partnership presents an unparalleled opportunity to advance AI transformation across Korea’s public and private sectors, ultimately transforming the way organizations operate and enriching the daily lives of millions of individuals.

  ASEAN, Azure OpenAI Service, Cloud for Sovereignty, KT Corporation, Microsoft, Shinhan Bank, Young-Shub Kim