South Korean Telcos Announce AI Transformation, But Global Investment Gap Persists

South Korea's top three mobile carriers have declared a 'transformation into AI companies,' but the gap in investment scale compared to global telecom operators remains significant. Unlike overseas counterparts who are making substantial investments with AI at the core of their network infrastructure, domestic telcos are still facing an assessment where their actual infrastructure investment and monetization performance are uncertain. Vodafone is investing $1.5 billion over 10 years with Microsoft (MS) to innovate AI customer experiences, and Verizon is collaborating with Nvidia to expand 5G-based AI solutions for industrial use. T-Mobile is integrating its proprietary AI into app services, positioning itself as a leader in the North American market. Compared to overseas examples like AT&T enhancing customer retention with its AI assistant 'Andi,' and T-Mobile commercializing real-time translation and personalized recommendation features, the disparity with domestic telcos is clear.

The background for the top three carriers' shift to AI companies lies in the limitations of their existing growth model, which relied on 5G subscriber migration. Amidst a complex crisis situation—including increasing telecommunications fee discounts, a growing elderly poverty rate, and weakening domestic demand due to low birth rates—there is a pressing need to secure 'the next growth engine.' The scale of telecommunications fee discounts has increased by approximately 45% in five years, from 963.2 billion won in 2020 to an estimated 1.4 trillion won in 2025. By 2030, individuals aged 65 and over are projected to constitute over a quarter of the total population, and South Korea's high elderly income poverty rate exacerbates the entrenched structure of fee discounts. With 'cash cow businesses' like children's phones and early education content shrinking due to low birth rates, the domestic market foundation for the three major telecom companies is facing a crisis.

The proportion of AI business revenue in South Korea's top three telecom companies is still in its early stages. SK Telecom aims for 1 trillion won in AI infrastructure revenue by 2030, but its current share is around 4% of total revenue. The Institute for Information & Communications Technology Promotion and Planning (IITP) points to reduced R&D investment and delayed infrastructure investment as weaknesses for Korean telcos, advocating for a move away from reliance on big tech and the necessity of developing proprietary LLMs (Large Language Models). Furthermore, it analyzes that it is time for telecom operators, equipment manufacturers, and the government to unite as 'one team' to secure technological leadership. Without substantial investment and policy support, leadership in the upcoming 6G and AI-RAN era could be ceded to global players who have already expanded their scale.