Political Pressure Amidst KDDI and SoftBank's Myanmar Business Friction

KDDI and SoftBank's 2023 fiscal year results were overshadowed by dark clouds. The impact stemmed from setbacks in their overseas businesses.

In the case of KDDI, the issue lies with its joint venture with Myanmar's state-owned telecommunications company, MPT. KDDI had actively pursued mobile telecommunications business in Myanmar since 2014, but the February 2021 military coup dealt a significant blow to its MPT operations. Due to delays in lease bond recovery, KDDI had to recognize 105 billion won in bad debt, which was the primary cause of a substantial 10.7% decrease in operating profit.

Makoto Takahashi, President of KDDI, expressed their intention to continue the Myanmar business, but the unstable political situation hindered significant progress. It served as a stark reminder of the risks associated with emerging market ventures.

Meanwhile, SoftBank has faced difficulties due to a personal information leak issue involving its subsidiary, Line Yahoo. Although Line Yahoo is a subsidiary of Naver, SoftBank holds a 50% stake. The information leak, originating from the system of an outsourced vendor for Naver Cloud, is estimated to have affected approximately 400,000 individuals.

The Ministry of Internal Affairs and Communications (MIC) believes the root cause of Line Yahoo's security issues lies in its relationship with Naver and has requested a restructuring of their capital relationship. This has sparked a strong backlash from the Korean government and public opinion, leading to friction between the two countries.

Junichi Miyakawa, President of SoftBank, stated that they are currently discussing a restructuring of the capital relationship with Naver, but anticipates the resolution process to take considerable time. Ultimately, both KDDI and SoftBank are grappling with difficulties due to their overseas ventures acting as a constraint.

In SoftBank's case, issues like information leaks surfaced in its relationship with the overseas company Naver, while KDDI suffered significant losses due to the materialized investment risks in the emerging market of Myanmar. Given the inevitable nature of overseas business for both companies, effectively managing these ventures will be a crucial challenge moving forward.