Japanese KDDI shares fall nearly 4% after giant mobile network outage

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A man wearing a mask checks his mobile phone at a shopping district amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan May 25, 2020. REUTERS/Kim Kyung-Hoon

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  • Nearly 40 million users affected by the outage; data service largely restored
  • Stocks recoup some losses after an opening slippage
  • Japan’s latest infrastructure problems after heat wave have strained power grid
  • Government expects detailed explanation, outage ‘very disappointing’

July 4 (Reuters) – Shares of KDDI Corp fell 3.9% on Monday after a weekend outage, the biggest system outage in the history of Japan’s second-largest mobile operator, which affected nearly 40 million users nationwide.

In a statement released at 9:00 a.m. local time (0000 GMT) on Monday, KDDI said data transmission has been broadly restored, but users may still experience difficulty making voice calls due to service restrictions.

The disruption, which began in the early hours of Saturday morning, was caused by an equipment malfunction and affected services ranging from weather data to package delivery and banking. Read more

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The outage of a pillar of Japan’s business establishment is the latest sign of strain on the infrastructure of the world’s third-largest economy, after its power grid cracked during a latest mild heat wave, although the outages have were narrowly avoided.

The KDDI disruption came just days before an election for Japan’s upper house of parliament. Prime Minister Fumio Kishida is promoting digital infrastructure as part of his “new capitalism” agenda to reinvigorate the economy.

By the midday break in Tokyo, KDDI shares had regained some lost ground, but were still down 1.8%, compared to a 0.6% gain for the benchmark Nikkei 225 (.N225) .

“We take this issue very seriously and expect KDDI to explain in detail what happened to those who were affected,” Deputy Chief Cabinet Secretary Seiji Kihara told reporters on Monday.

“Many have not been able to use mobile phone service – an important infrastructure for daily life and the global economy – for a long time, and we find this very disappointing,” the government spokesman said.

“We deeply regret this as a telecom operator able to support critical infrastructure and provide stable services,” KDDI Chairman Makoto Takahashi said on Sunday.

The Japanese government will take necessary action after receiving an official report from KDDI, Yasushi Kaneko, Minister of Internal Affairs and Communications, said on Sunday.

Regulators played a role in overseeing IT systems at the retail banking arm of the country’s third-largest lender, Mizuho Financial Group (8411.T), after a series of ATM outages.

“The main risk is that more outages are possible because the complexity of the network is difficult to manage,” said Kirk Boodry, analyst at Redex Research, which publishes on the Smartkarma platform.

Japan’s three major telecom carriers have all experienced widespread network outages in recent years.

NTT Docomo’s outage last October hit 12.9 customers, while SoftBank Corp’s network disruption in late 2018 cast a shadow over its outstanding public listing.

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Reporting by Sam Nussey, Sakura Murakami and Sam Byford; Editing by Muralikumar Anantharaman and Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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