KT will hold a 51 per cent stake and Softbank the remaining 49 per cent in the JV, to be created by September with 70 billion won ($65 million) in investment, a KT spokesman said.
KT said Japanese companies were looking at building power-hungry data centers in neighboring Korea as energy use was restricted in Japan and safety concerns heightened following its March earthquake and tsunami.
The JV will build by October an internet data center in the South Korean city of Gimhae offering cloud-computing services to Japanese companies, KT said in a statement.
Cloud computing, which allows remote access to computing power and data over the Internet, can drive down costs and save energy and has been touted as the next big trend in the technology sector.
Cloud computing generates a fraction of KT's revenue, but the seller of Apple's iPhone is betting big on the technology to drive growth, targeting 700 billion won in revenues from cloud computing services in 2015.
KT said last week that it and its affiliates aimed to achieve 40 trillion won in sales in 2015, with 45 percent of the sales coming from 'non-telecom' areas as it moves to create new revenue streams in a nearly saturated domestic market.