KT was found to have increased research and development spending the most aggressively among the three telecom companies last year. As it accelerated its shift to an "AICT corporations (a company that combines artificial intelligence as a core capability)" centered on collaborations with global big tech firms such as Microsoft (MS) and Palantir, related investment appears to have expanded.
◇ KT, development costs alone surged by 124.8 billion won… AI and cloud R&D investment expands
On the 8th, ChosunBiz analyzed last year's business reports of the three telecom companies and found that KT's research and development spending was 355.307 billion won last year, up about 70% from the previous year (211.482 billion won).
What stands out is that most of KT's increase in research and development spending came from the development costs line. According to KT's business report, on a consolidation basis, the portion of research and development expensed as selling and administrative expenses rose by about 19 billion won from 192.569 billion won in 2024 to 211.603 billion won last year. In contrast, the development costs (intangible amortization) line jumped by about 124.8 billion won over the same period, from 18.913 billion won to 143.704 billion won. About 87% of the increase in research and development spending (143.8 billion won) came from development costs. The share of technology development costs linked to intangible assets grew larger than simple research organization operating expenses.
KT's R&D expansion is analyzed as being tied to the transition strategy to "AICT corporations" pursued after former CEO Kim Young-shub took office. To execute the strategy, development investment related to AI models, cloud, and platforms appears to have increased. In fact, KT said in its business report that, under the chief technology officer organization, it is pushing to strengthen AI governance and develop Korea-specific AI models through AI Future Lab, Gen AI Lab, Agentic AI Lab, Decision Intelligence Lab, and others. In addition to next-generation network technologies such as 6G (sixth-generation mobile communication), quantum cryptography, and Open RAN, optimization of AI- and cloud-based network operations was also presented as a major research and development task.
Collaboration with U.S. big tech is also cited as a reason for the R&D expansion. KT signed a five-year strategic partnership with MS in Sep. 2024. The term runs from Sep. 2024 to Sep. 2029. Key items include joint development of Korea-style AI models and services, launch of a Korea-style secure public cloud, establishment of a dedicated AX (AI transformation) total-service subsidiary, strengthening the domestic AI ecosystem through joint R&D and startup investments, and a joint talent development project. A telecom industry official said, "Expanding R&D to push this forward would have been inevitable." In fact, a proof of concept for a data governance framework through collaboration with MS was also included in research and development results.
Collaboration with Palantir also aligns with KT's expansion of its AX business. KT said in its business report that, through a proof of concept conducted with Palantir, it completed functionality reviews and feasibility validation for Foundry, Ontology, and the Artificial Intelligence Platform (AIP). Based on an early-detection scenario for anomalies using wireline network traffic, Palantir solution functions were also validated as a research and development task.
◇ SKT's R&D investment tied up by hacking fallout, LGU+ holding on with group AI
SK Telecom still had the highest research and development spending among the three telecom companies, but its total research and development spending decreased from the previous year. SK Telecom's research and development spending last year was 355.772 billion won, down 9.4% from the previous year (392.844 billion won). LG Uplus came to 146.417 billion won, up just 2.8% from the previous year (142.404 billion won).
SK Telecom's reduction in research and development spending appears to reflect increased burdens for customer response and security-related expenses after last year's SIM hacking incident. SK Telecom incurred about 250 billion won in one-off expenses, including SIM replacements and compensation for dealer losses. It also announced a 700 billion won information security innovation plan over the next five years. While SK Telecom is expanding AI businesses such as AI data centers, adot, and its own AI foundation model, post-incident responses weighed on its performance and investment capacity last year.
LG Uplus's limited increase in research and development spending is seen as the result of a strategy to reduce expense burdens by leveraging AI assets at the group level. LG Uplus's AI strategy is closer to applying a groupwide AI model to telecom services and corporations solutions rather than developing a standalone base model at scale. This differs from KT's approach of joining hands with global technology corporations to rapidly ramp up proprietary AI and cloud development costs. For example, LG Uplus's telecom-specialized Generative AI "IXigen" was trained on the company's telecom and platform data based on EXAONE, a large-scale AI model from LG AI Research. The AI service development platform "IXI Solution" unveiled by LG Uplus was also built on IXigen.
Meanwhile, research and development as a share of sales was highest at SK Telecom, at 2.08%, last year. It was followed by KT at 1.26% and LG Uplus at 0.95%. Compared with the previous year, SK Telecom fell 0.11 percentage point (P) from 2.19%, KT rose 0.46 percentage point from 0.80%, and LG Uplus slipped 0.02 percentage point from 0.97% to 0.95%.