Web-based Messenger Line "Not Talking with SoftBank," Though They Should Be

Masayoshi Son, CEO of Japanese based telecom SoftBank, isn’t letting up in his apparent effort for telecom dominance; the latest development surrounds rumors of SoftBank’s interest in purchasing a significant stake in web-based messaging company Line, owned by Naver.

Line, though just three years old, boasts 300 million users, making it the largest social network in Japan. It has also beat out Facebook Messenger in Taiwan and Thailand and offers steady competition to other services like Skype in other countries. Line denied being in talks with SoftBank, but it actually wouldn’t be a bad move for the young company. Strong backing from SoftBank would strengthen Line’s market value in an initial public offering planned later this year.

For SoftBank the acquisition would bring a web-messaging service sporting a strong user base into its fold, complementing large stock purchases of game maker Supercell Oy, phone distributor Brightstar, and carrier Sprint. They also own a stake in GungHo Online Entertainment and Son has been looking for Sprint to acquire one its US competitors; rumors of an offer to T-Mobile were circulating in late 2013.

Web-based messaging has become a desired and competitive market which has garnered attention recently with Facebook’s $19 billion purchase of WhatsApp. Standard cellular based texting has failed to keep up with some of the innovations brought to web-based services like emojis and stickers, as well as longer text lengths and the ability to see a messages delivery and reply status. Line also offers voice and video calls and joint gameplay.

Mobile research firm Ovum projects that by 2016 the cellular market will lose $54 billion in texting income to web-based services. Texting has long been pure profit for cell companies so the growth of web texting has made more users reticent to pay even $5 to add it to a plan. While some carriers, including AT&T and Verizon have started including unlimited texting in plans they offset the loss by raising data rates, which heavy internet users may be more willing to pay. Still, with web-based voice calls and tablet use also increasing in popularity the challenges just continue to grow for the cellular industry.