Microsoft inked a new agreement with SK Telecom to combine technological capabilities and collaborate on 5G, artificial intelligence (AI), and cloud services to expand and promote the capabilities of IoT. The deal also calls for both companies to work together on new AI-powered products and services for the enterprise.

Partnerships between large tech companies and telecom operators are growing as 5G efforts gain momentum, particularly as network operators search for new services and products that take advantage of high-capacity and low-latency networks that are being developed today.

Expansive deals between operators and big tech companies are going to be extremely important and will continue to grow, says Anshel Sag, analyst at Moor Insights & Strategy. “The reason why this is happening is that the operators know that they don’t have the domain expertise to fully comprehend and address all of the possibilities of 5G, IoT, and AI.”

Industry stalwarts are increasingly targeting large network operators and infrastructure vendors — and earning new business opportunities as a result. Dell Technologies aims to unlock new revenue for operators through recent partnerships with Orange and China Unicom. Hewlett Packard Enterprise (HPE) recently landed a 5G partnership with Samsung after it launched an edge system for telecommunications networks.

Microsoft and SK Telecom established a partnership earlier this year to integrate and jointly market Metatron, SK Telecom’s big data service, with Microsoft Azure. The organizations now plan to combine the capabilities of SK Telecom’s NUGU AI platform with Microsoft’s Cortana digital assistant to develop enterprise services.

“Big companies like Microsoft need to have as much broad coverage as they can get, and partnering with operators will be one of the best ways to accomplish that,” Sag says. “The cloud services that companies like Microsoft offers may be core to these partnerships. The company has services available for 5G, IoT, and AI and can enable the operators to address these verticals much more quickly and effectively.”

Per the expanded agreement, SK Telecom will also adopt Microsoft 365 for its workforce and eventually bring Microsoft 365 to other firms owned by SK Group, the parent company of SK Telecom. “SK Telecom is pleased to join hands with Microsoft as collaboration with global leading companies like Microsoft is essential to gain leadership in the 5G market, where competition is already fierce,” Park Jung-ho, president and CEO of SK Telecom, said in a prepared statement.

Indeed, SK Telecom and its counterparts in South Korea have all deployed 5G services during the past few months. More than 85,000 5G base stations had been deployed in the country as of early April, according to the government.

Developing new services and capabilities for enterprise customers will be critical for all operators as they build 5G networks, and IoT is widely regarded as the most likely beneficiary of that growth. Worldwide, the number of cellular IoT subscribers jumped 70% during 2018 to reach 1.2 billion connected devices, according to a new report from Berg Insight. The firm now predicts there will be more than 9 billion IoT devices connected to cellular networks worldwide by 2023.

“This will be a deep and multifaceted partnership that strengthens the power of cloud and AI to deliver innovative new services to customers,” Jason Zander, executive vice president of Azure at Microsoft, said in a prepared statement.

Sag says he expects Microsoft to integrate its capabilities into SK Telecom’s infrastructure, thereby enabling the operator’s customers to gain access to new experiences from 5G, AI, and IoT. Latency is of paramount importance and, as such, being close to the user will be important too, he explains. Of course, few companies are closer to users than operators like SK Telecom that provide networking services and connectivity.