Dec 14, 2017

Rakuten weighing entrance into Japan's competitive cell phone market

Rakuten weighing entrance into Japan's competitive cell phone market photo

TOKYO - Rakuten Inc. said Thursday it is considering an investment which would make it one of Japan's major mobile carriers and put it into direct competition with the country's three established telecommunications giants.

The e-commerce firm said it will file for an allocation of wireless spectrum with the Ministry of Internal Affairs and Communications in January at the earliest. It is considering raising up to 600 billion yen ($5.3 billion) through 2025 to build its wireless network.

The market is currently dominated by NTT Docomo Inc., KDDI Corp. and SoftBank Group Corp., with the three companies holding a roughly 90 percent share of the customer base. Rakuten's entry into the mobile telecommunications sector is likely to put downward pressure on prices with the increased competition sparking a price war.

Rakuten said it is aiming to launch the service in 2019 and will hope to boost its number of subscribers to more than 15 million. The company is planning to make use of a public frequency band to be reallocated from police and local governments, an informed source said.

Rakuten said its entry into the market "will provide the group with a new engine for future growth, and allow (it) to become one of the few companies in the world that can provide a comprehensive package of services in e-commerce, fintech, digital content and mobile communications," the company said in a statement on Thursday.

Rakuten currently operates a low-cost wireless communication service "Rakuten Mobile" by leasing network capacity from NTT Docomo. By establishing its own network, the company is aiming to attract more users by providing benefits through its online shopping site.

The move comes amid growing competition with rival U.S. online retail giant Amazon.com Inc.

The Japanese internet retailer posted strong profits for the nine months through September, but its e-commerce operation's results were considered weak by many shareholders.

At its earnings conference in November, Rakuten Chairman and CEO Hiroshi Mikitani said that "Amazon is taking no account of its profits in order to take Rakuten down," adding that his company will focus on its financial and advertising operations to boost further growth. Rakuten is hoping to turn the new telecommunications venture into one of its core businesses.

Rakuten has already been actively expanding its low-cost wireless communication service, and the company said in November, that its subscribers topped 1.4 million following the acquisition of Plus One Marketing Ltd.'s discounted smartphone business.

The number of subscribers to Docomo, KDDI and SoftBank services as of the end of September are roughly 75.36 million, 66.44 million and 29.72 million, respectively.




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