On August 22, Japan's ruling Liberal Democratic Party (LDP) began a full-scale review of the possibility of selling Nippon Telegram and Telephone (NTT) shares held by the government. Currently, the NTT Law requires the government to hold at least one-third of the shares. Therefore, the law must be amended to allow if it decides to sell any shares.
Proponents of the sale are hoping to secure financial resources for increased defense spending. Members of the new LDP project team (PT) met on August 22, while discussions began the following week.
In the Background
Former LDP Secretary-General Akira Amari raised the idea of selling NTT shares on an August 6 Fuji Television program. Amari pointed out that the sale could result in "a substantial, long-term stable source of revenue." However, selling shares off all at once could also cause stock prices to plummet. To avoid this, Amari suggested the government "would plan to sell them over the course of 20 years or so."
Currently, the government holds a 34.25% share in NTT. The market value is approximately ￥4.7 trillion JPY ($32 billion USD).
A special task force chaired by Policy Research Council chairman Koichi Hagiuda set up the project team. It is charged with researching ways to finance defense spending other than by raising taxes. Amari, who is well-versed in economic security issues, chairs the group.
Takayuki Kobayashi, a former minister for economic security, is expected to serve as its secretary general. Kobayashi was instrumental in the passage of the Economic Security Promotion Act in May 2022.
In June, the LDP's specially appointed committee submitted a proposal to Prime Minister Fumio Kishida. It included the following suggestion: "In order to secure financial resources for strengthening defense capabilities, the government should reexamine the necessity of holding NTT stocks."
The committee also insisted that revision of the NTT law, including full privatization, should be considered as soon as possible.
Their view is not unanimous within the LDP, however. Sanae Takaichi, Minister of State for Economic Security, is taking a cautious stance. At a press conference on August 1, Takaichi commented on the potential vulnerability to countries of concern, such as China. "I hope the discussion will consider the possibility that countries of concern could buy all (the shares)."
Amari has indicated that Takaichi's concerns can be addressed under the Foreign Exchange and Foreign Trade Act. That law restricts investments by foreign investors.
On the other hand, the current NTT Law could also be a cause for concern. The law obliges NTT to disclose the results of its research on telecommunications technology. This raises further economic security issues in terms of technology leakage.
Leading foreign IT companies are also becoming increasingly more prominent as the Internet continues to spread. Within this changing climate, NTT's current position is precarious. There are persistent concerns that the company's obligation to provide telephone service nationwide hampers its ability to compete. NTT President Akira Shimada also admits, "There are some aspects (of the law) that do not fit the current era."
LDP's Kobayashi took up this point. He posted on social media, saying, "It is important to create an environment in which Japan's information and telecommunication companies can compete with the rest of the world." Furthermore, he mentioned the need to use the proceeds from the sale of NTT shares for advanced research and development in IT technologies, in addition to funding for defense.
Key LDP Members: Where They Stand
Koichi Hagiuda, LDP Policy Research Council chairman, supports revision of the NTT law. At the July 25 party meeting, he said, "I would like to include the option of completely privatizing NTT as we move forward with discussions."
Sanae Takaichi, Minister of State for Economic Security is concerned about the impact on economic security. At an August 1 press conference, she said, "NTT conducts valuable R&D closely related to economic security. I hope the discussion will consider the possibility that (stocks) could all be bought up by countries of concern."
Akira Amari, former LDP Secretary-General, takes a long view of the issue. On August 6 during a Fuji TV broadcast, he said, "We would have to sell them over the course of 20 years or so. This could provide a substantial, long-term stable source of revenue."
Akira Shimada, President, NTT has also commented. At an August 9 press conference, he said: "Selling stocks off all at once will impact shareholders. We hope the government will consider measures to avoid this scenario."
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(Read the related story in Japanese.)
Author: The Sankei Shimbun