SoftBank CEO Junichi Miyakawa said on Thursday that the Japanese telecommunications firm is in talks with South Korea’s Naver over control of LY Corp, which operates the popular messaging app Line.
Naver said last week that “very unusual” administrative guidance from the Japanese government over a data leak last year required it to reduce its control of LY Corp, which is majority owned by a joint venture between SoftBank and Naver.
LY Corp admitted in November last year that there had been unauthorised access of its systems by a third party via Naver’s cloud system. This led to the leak of the personal data records of more than 300,000 Line users and others.
Although the guidance from Japan’s internal affairs and communications ministry about the data leak did not explicitly mention a sell-down, it did direct LY Corp to “review the relationship where the outsourced company has a significant degree of capital control” referring to Naver.
LY Corp is also terminating outsourcing to Naver in response to Japan’s guidance, SoftBank said in a presentation.
South Korea’s government said last month it is consulting with Naver and there should be no discriminatory measures against Korean companies. Historical tensions had led to trade disputes between Japan and South Korea from 2019 until last year, but the current administrations are mending ties.
Japan lifted export curbs on high-tech materials to South Korea in March 2023 and South Korea’s industry minister met his Japanese counterpart for the first time in six years last month.
After merging Line with Yahoo Japan in 2019, Naver and SoftBank now hold 50% each in the joint venture which controls LY Corp, through a 65% stake, SoftBank documents show.
LY Corp said on its website that more than 95 million monthly active users used Line in Japan as of March last year, and it had another 83 million users in Thailand, Taiwan, and Indonesia. Line was launched in 2011.
LY Corp’s market capitalization was about 2.77 trillion yen ($17.77 billion) on Thursday.
($1 = 155.8600 yen)
Reuters