KT, South Korea’s top telecom company, partnered with Microsoft last month to advance its AI and cloud capabilities. However, a global IT outage from Microsoft this month has complicated matters. With CEO Kim Young-shub nearing his one-year mark, the crisis risks derailing their joint projects. Kim had relied on external solutions to enhance KT’s competitiveness, but the ongoing impact of the outage is hindering progress on their collaborative projects.
KT signed a strategic partnership with Microsoft on June 3 to collaborate on AI and cloud technologies. The signing ceremony, held at Microsoft’s headquarters in Washington State, was attended by KT CEO Kim Young-shub and Microsoft CEO Satya Nadella.
KT initially anticipated using Microsoft’s cloud services to advance joint AI and cloud research, develop Korean-specific AI, cloud, and IT services, establish an AI and cloud innovation center, and cultivate talent. Although the cost of using Microsoft’s cloud services has not been disclosed, industry estimates suggest it could reach several trillion won over the next five years.
“KT Cloud, a subsidiary of KT Group, is a leader in the domestic financial cloud market. However, having a diverse lineup in the managed service provider (MSP) role enhances our competitiveness,” a KT spokesperson said. “This partnership goes beyond mere technological cooperation to establish a strategic alliance. Through this, KT aims to become a leading ‘AICT (artificial intelligence and information and communication technology) company.’”
KT plans to develop a Korean-style sovereign AI and cloud solution, designed to create AI models and services optimized for Korean culture and language, with data management remaining domestic. The two companies plan to finalize their cooperation details by September.
However, industry speculation suggests KT may be shifting towards becoming an MSP rather than focusing on the Korean-style sovereign AI and cloud solution. Typically, cloud service providers (CSPs) like Microsoft, Amazon Web Services (AWS), and KT Cloud supply infrastructure, while MSPs implement these services for clients. KT Cloud was expected to lead the MSP business within the KT Group, but since Kim took office last year, KT’s move is seen as a direct entry into the MSP market.
KT Cloud, a wholly-owned subsidiary spun off in 2022 under former CEO Ku Hyeon-mo, has declined to provide further details about the Microsoft partnership, stating, “We have no additional information to share.” An IT industry insider noted, “Previously, KT Cloud was supported as a subsidiary, but after the CEO change, KT began collaborating with foreign companies, leading to rumors of misalignment in their cloud business strategy.” The insider added, “This shift reflects CEO Kim Young-shub’s philosophy of ‘making external solutions our own,’ which differs from KT’s previous approach.”
