South Korea’s telecom companies strive to expand their operations beyond the telecom sector by venturing into emerging fields such as AI and cloud technologies. Despite this, their R&D spending in the past year presented a mixed picture. While KT and LG U+’s R&D investments declined compared to 2022, SK Telecom, keen on advancing its initiatives, raised its R&D budget.
Based on the annual reports released by each company on Mar. 22, SK Telecom’s R&D spending for the previous year amounted to $293 million (391.8 billion won), a 4.7% increase from the $280 million (374.3 billion won) spent the year before. During the same timeframe, KT saw a 2.3% reduction in R&D expenditures to $168 million (223.5 billion won), and LG U+’s R&D spending fell by 5% to $89.8 million (120.1 billion won).
Last year, SK Telecom allocated 2.23% of its revenue to R&D, a slight increase of 0.07 percentage points from 2022. In contrast, KT’s R&D spending as a percentage of revenue dipped by 0.05 percentage points to 0.85%, and LG U+’s fell by 0.08 percentage points to 0.83%.
The three telecom firms are directing their R&D efforts from traditional telecom services to new ventures to foster growth.
SK Telecom announced, “Our R&D division is engaged in various research activities including cloud, AI transformation (AIX), media, and infrastructure.” In the previous year, the company enhanced its AI service Adot by integrating iPhone call recording and real-time translation features, aiming to attract more users. For its B2B (business-to-business) clientele, SK Telecom introduced the Artificial Intelligence Consultation Center (AICC) service, with SK Rent-a-Car among its notable clients. The company also unveiled an AI-powered copywriting tool capable of generating advertisement text within seconds, drawing in customers such as SK Stoa and Benepia.
On the other hand, KT focuses on AI technology development, AI transformation services, and platform enhancement. At the Mobile World Congress (MWC) 2024, the largest mobile tech fair globally, held in February, KT’s President Kim Young-shub highlighted the critical role of AI in the company’s growth strategy, saying, “The AI train has just left the station, and there’s still time to board, but soon it will be too late to disembark.”
LG U+ said, “Our cloud and AI data technology group, alongside the AI data engineering and product teams, are diligently advancing technological development.”
All three companies face the challenge of attracting new subscribers as the 5G market nears saturation. Last year, the 5G subscriber base saw a 16.9% increase from 2022, reaching 32.881 million.
