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Political pressure flares up as KDDI and SoftBank clash over Myanmar operations
- Writing language: Korean
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- Base country: Japan
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- Economy
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Summarized by durumis AI
- KDDI and SoftBank suffered significant losses in their 2023 fiscal year due to setbacks in their overseas operations.
- KDDI was hit by the Myanmar military coup, impacting its joint venture with MPT, while SoftBank faced difficulties due to the data leak at Line Yahoo.
- Both companies are striving to resolve the issues stemming from their overseas ventures, but they are expected to exercise greater caution in managing their overseas operations going forward.
A dark cloud hung over KDDI and SoftBank's 2023 fiscal year-end results. Both companies were impacted by setbacks in their overseas businesses.
In the case of KDDI, the joint venture with Myanmar's state-owned telecommunications company, MPT, was affected. KDDI has been actively pursuing mobile telecommunications operations in Myanmar since 2014. However, the military coup in February 2021 dealt a major blow to the MPT business. Due to delays in recovering lease receivables, KDDI was forced to record 105 billion won in bad debt, which was the primary reason for the company's significant 10.7% decline in profit.
KDDI President Makoto Takahashi stated that the company would continue its Myanmar operations. However, the unstable political situation makes it difficult to achieve significant success. This has served as a real-world lesson on the risks associated with emerging market ventures.
Meanwhile, SoftBank is facing difficulties due to a personal information leak issue involving its subsidiary, Line Yahoo. Line Yahoo is a subsidiary of Naver, but SoftBank holds a 50% stake in the company. An information leak occurred in the system of an external contractor for Naver Cloud, and it is estimated that approximately 400,000 people's personal information was leaked.
The Ministry of Internal Affairs and Communications believes that the root cause of Line Yahoo's security issues lies in its relationship with Naver and has demanded a restructuring of the capital relationship. This has sparked strong backlash from the Korean government and public opinion, leading to friction between the two countries.
SoftBank President Jun'ichi Miyagawa stated that discussions are underway to restructure the capital relationship with Naver. However, he anticipates that it will take considerable time to resolve the issue. Ultimately, both KDDI and SoftBank are facing difficulties due to the burden of their overseas businesses.
In the case of SoftBank, issues such as information leaks have arisen in its relationship with the foreign company Naver, while KDDI has suffered significant losses due to the materialization of investment risks in the emerging market of Myanmar. Both companies must effectively manage their overseas operations, as they are inevitable for their business.