Bloomberg News

SoftBank Seen Boosting Usage With Line’s 370 Million Customers

February 26, 2014

Line Corp. may meet its target for 500 million users by year’s end, with Bank of America Merrill Lynch saying a possible investment from SoftBank Corp. (9984) would help boost data usage at the Japanese wireless carrier.

About 85 percent of the instant-messaging application’s current 370 million users are based outside Japan, Line said in a statement today. SoftBank is seeking to buy a stake in Tokyo-based Line, people with knowledge of the matter said.

Services that rely on Internet access to let users send messages or make calls are displacing traditional text messaging services offered by wireless carriers. This month Facebook Inc. said it would pay as much as $19 billion to acquire WhatsApp Inc., just days after Japan’s Rakuten Inc. agreed to pay $900 million for Viber.

“The global Internet industry has seen a number of M&A as major platforms in each space” look to build unified platforms, Yoshiyuki Kinoshita, an analyst at Merrill Lynch, wrote in a note to investors yesterday. “Strengthening in this area looks like a logical move to us.”

Line is owned by South Korea’s Naver Corp., which rose 3.4 percent in Seoul, extending its gain in the past 12 months to 83 percent. SoftBank fell 1.3 percent in Tokyo.

Line has more than 10 million users in the U.S. and Malaysia, Chief Operating Officer Takeshi Idezawa said during a briefing. SoftBank hasn’t offered to buy a stake, Idezawa said today.

$14.9 Billion

In October, Line said it’s considering various options, including an initial public offering. Fumiko Hayashi, a spokeswoman for Line in Tokyo, yesterday said nothing has been decided about an IPO.

Line has received at least one other offer for all or some of the company, prompting it to slow preparations for an IPO, said two of the people familiar, who asked not to be identified because the information is private. Line may be valued at as much as $14.9 billion, according to estimates by BNP Paribas SA.

Line is adding services, including the ability to call smartphones and fixed-lines in six countries, beginning in March, Executive Officer Jun Masuda said today.

SoftBank’s founder, billionaire Masayoshi Son, has held talks with Line about a purchase, one person familiar with the matter said.

Japan’s No. 3 wireless company, which also controls Sprint Corp. in the U.S., has been acquiring stakes in providers of content including China’s Wandoujia and Finnish game maker Supercell Oy.

Taiwan, Thailand

A deal between Line and SoftBank would give the app access to Sprint’s 55 million subscribers and help expansion in the U.S., Merrill Lynch said in a separate report.

Line is the No. 1 mobile messenger service in Japan, Taiwan and Thailand -- ahead of Facebook Messenger in all three countries, according to a Feb. 20 report from Samsung Securities Co. citing data from researcher App Annie Ltd. Line also ranks highly in Chile and Mexico, where it competes with Microsoft Corp.’s Skype, and in South Korea where it competes with KakaoTalk.

Line generated about 34.3 billion yen ($335 million) in revenue last year from its core business by selling games and stickers -- cartoons or illustrations that users can send to friends, the company said this month.

To contact the reporters on this story: Takashi Amano in Tokyo at tamano6@bloomberg.net; Aaron Clark in Tokyo at aclark27@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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