KT CEO Kim Young-shub, right, shakes hands with Microsoft CEO Satya Nadella after signing a five-year partnership in co-developing AI and cloud services at the headquarters of Microsoft in Redmond, Wash., Friday (local time). Courtesy of KT

KT and Microsoft have joined forces to co-develop Korea-tailored artificial intelligence (AI) and cloud computing solutions amid the global rise of the two promising tech areas, the companies said Sunday.

The multi-billion-dollar partnership is widely expected to boost Korea's global footing in AI and relevant services optimized for Korean industries and culture. The five-year-long partnership will also enable KT to strengthen its global competitiveness in telecommunications and other key tech areas.

“The partnership with Microsoft presents a pivotal opportunity not only for technological collaboration, but also for expanding Korea's AI foundation and driving transformative innovation across industries and daily life,” KT CEO Kim Young-shub said.

“Leveraging this strategic partnership, we aim to rapidly evolve into an AICT company with unparalleled competitiveness in domestic and global markets,” he said. The AICT refers to a combination of AI and information and communications technology ICT.

Microsoft also welcomed the latest partnership with KT and pledged to expand ties to more advanced tech areas.

“Our strategic partnership brings together KT's industry expertise with the power of our entire tech stack, from Azure AI to Microsoft 365 Copilot,” Microsoft CEO Satya Nadella said. “Together, we will help accelerate the AI transformation of Korean organizations across the private and public sectors and build new AI-powered experiences for millions of consumers.”

Firstly, both companies will utilize OpenAI's GPT-4o and Microsoft's Phi language model to jointly develop the Korean version of the AI model.

These models will be used for both KT's internal and consumer-facing applications, such as customer service chatbots, and also for building industry-specific AI solutions for B2B customers across industry verticals to best serve the needs of Korean consumers and businesses.

KT plans to expand the development and utilization of KT-custom AI agents not only for consumer use cases in education, health care and in-vehicle infotainment, but also for business applications.

Both firms will also focus on launching Secure Public Cloud services, tailored for industries regulated in Korea. KT will drive its Secure Public Cloud business with support from Microsoft, enabling public sector and regulated industry customers to use new platform capabilities for securing data and workloads and helping them comply with local privacy and regulatory requirements.

Microsoft has enough experience in its partnership with a group of European nations, such as Switzerland and Italy, in co-developing cloud services. Microsoft will share its know-how with KT's IT specialists so both sides can operate more secure and cutting-edge cloud services.

Additionally, KT will establish a new service firm specializing in AI transformation (AX) to assist businesses in Korea in harnessing the latest AI innovations.

The upcoming KT AX-specialized service company will offer advanced Microsoft Cloud and AI expertise and solutions tailored for the Korean market, with plans for expansion into broader markets, including ASEAN.

Microsoft will support this initiative over the next three years by providing professional consulting resources to develop core practices and capabilities for the new entity.

KT and Microsoft also showcased their plan to build an innovation center in Seoul, which will serve as the pivotal facility to achieve the latest vision. Microsoft will provide personnel support for the facility for the next three years to complete the joint projects on time.

KT has plans to foster new AI startups and develop a partner ecosystem for the nation's AI transformation. Under the drive, KT and Microsoft will attract a research workforce from universities and tech organizations.

Leading researchers and businesspeople will deepen their research initiatives in network modernization, AI health care and a string of other sectors.