A model tests SK Telecom's artificial intelligence app A. (A Dot) in this handout photo released Aug. 26. Courtesy of SK Telecom

Korea's top three mobile carriers are aiming to drive new growth with their artificial intelligence (AI) services, seeking to break through the stagnation in 5G subscriber growth.

Buoyed by their moves, the combined operating profit of SK Telecom, KT and LG Uplus is anticipated to surpass 1 trillion won ($737.8 billion) in the third quarter of this year, improving outlooks on their sustainable growth.

According to market tracker FnGuide, brokerages' consensus estimates the combined operating profit of the three major mobile carriers for the third quarter to reach 1.23 trillion won, up 14.7 percent from a year earlier.

Leading the anticipated improvement is KT. Analysts estimate that KT's operating profit for the July-to-September period will reach 454.9 billion won, up 41.3 percent year-on-year. SK Telecom is expected to post an operating profit of 525.1 billion won, showing a 5.5 percent growth during the same period.

LG Uplus' operating profit is anticipated to decrease slightly by 0.8 percent to 252.3 billion won, due to depreciation costs related to a new integrated information technology system which had been accounted for since last year. Despite the costs, the company's business performance is expected to have improved across its various sectors.

The anticipated improvements are attributed to the telecom companies' successful transition efforts to new businesses, despite the growth stalemate of their 5G subscriptions.

According to the Ministry of Science and ICT, the number of 5G subscriptions in Korea has reached 33.85 million, accounting for 65.4 percent of the country's population of 51.77 million. The number of 5G subscribers increased 1.3 percent from July to August 2023, but slowed to 0.7 percent from April to May this year.

KT CEO Kim Young-shub speaks during a press conference in Seoul, Oct. 10. Yonhap

Against this backdrop, the three major telecom companies have been seeking new opportunities in AI services.

According to SK Telecom, the company will hold the SK AI summit on Nov. 4 to explore ideas for expanding the AI ecosystem. OpenAI President Greg Brockman, Microsoft Executive Vice President Rani Borkar and a number of AI industry gurus will visit Korea to attend the forum.

During the forum, SK Telecom CEO Ryu Young-sang and SK hynix CEO Kwak Noh-jung will present SK Group's AI strategy and updates to the group's product development status.

Recently, SK Telecom has been concentrating the company's resources on AI services, signing partnerships with global AI companies. In June, SK Telecom invested $10 million in U.S. AI search engine firm Perplexity to upgrade SK Telecom's AI personal assistant service A. (A Dot).

In July, it invested $200 million in U.S. company SMART Global Holdings to jump into the end-to-end AI factory and data center solution business. To expand domestic infrastructure and meet growing demands for AI services, SK Telecom plans to introduce Nvidia's H100 AI processors to its data center by the end of this year.

"Before the upgrade, A Dot had 340,000 daily active users, but this number surged to an average of 490,000 in September, and the company is now considering a paid subscription model," Hyundai Motor Securities analyst Kim Hyun-yong said.

"The AI data center has the greatest potential for business expansion, not only through investments in global companies but also by creating synergy with affiliated SK companies."

KT is also seeking to transform itself from a mobile carrier to an AI communications technology firm.

KT recently announced a strategic partnership with Microsoft, promising to invest approximately 2.4 trillion won over the next five years in AI and cloud services.

LG Uplus officials show the verification results of its AI-based cloud-radio access network (cloud-RAN) technologies in this handout photo released on Sept. 18. LG Uplus cooperated with Dell Technologies to verify the automation technology of cloud-RAN. Cloud-RAN enables the integrated management of wireless access network equipment in a cloud environment. Courtesy of LG Uplus

By the second quarter of next year, the company plans to finish developing a Korea-specific large language model based on GPT-4o and provide AI solutions tailored to public and financial sectors by utilizing the smaller-scale language model, Phi 3.5.

KT and Microsoft will establish a company specializing in providing AI transition services for businesses. The joint venture will provide a one-stop service to businesses, helping them build AI environments by leveraging KT's IT capabilities and Microsoft's AI cloud platform. Starting in Korea, they plan to expand their operations to other Asian and global markets.

LG Uplus is also gearing up to roll out AI services based on its own model ixi. The company is now in the final stages of preparing to launch its ixi-O AI personal assistant service later this month.

The AI service will initially be introduced for iPhone users, and the company plans to consider expanding the service to Android devices depending on customer feedback.