Rakuten Mobile, a unit of Rakuten Group, is aiming to improve its services by gaining access to high-frequency platinum spectrum in the 700 MHz to 900 MHz range. This allocation, which is expected to be decided by the Ministry of Internal Affairs and Communications by October 23, has long been a target for Rakuten. It offers enhanced mobile connectivity, particularly within buildings. Notably, Rakuten is the only one among Japan’s major wireless carriers without access to this spectrum.
Despite substantial investments of over 1 trillion yen in infrastructure, Rakuten Mobile faced a 185 billion yen operating loss in the first half of the year. The loss has been decreasing quarterly since its peak in early 2022. Rakuten, as a whole, has reported losses for 12 consecutive quarters. The struggle with poor connectivity has hindered its efforts to attract subscribers.
In a bid to improve its standing, Rakuten introduced a new plan in June, offering unlimited data usage while roaming on rival KDDI’s network. They also allowed subscribers to roam in select downtown areas where connectivity was previously an issue. However, the company estimates it would need between 8 million and 10 million subscribers to achieve a monthly profit on an EBITDA basis. As of late August, they had surpassed 5 million subscribers, suggesting a gradual path toward their goal.
Looking ahead, Rakuten faces substantial bond payments, with 78 billion yen due in 2023, followed by 300 billion yen in 2024 and 400 billion yen in 2025. To bolster its capital, the company raised 300 billion yen in May through new share issuances and private placements. Rakuten is also seeking to trim capital spending by approximately 300 billion yen from 2023 to 2025, thanks to a new roaming agreement with KDDI. Despite these efforts, analysts suggest an additional investment of 50 billion yen to 100 billion yen over the next two years will be necessary for utilizing the platinum bands in key metropolitan areas like Tokyo, Nagoya, and Osaka. This presents a significant financial challenge for the company. Rakuten is banking on its virtualization technology, which replaces much of the network hardware with cloud-based software, to facilitate the rollout of platinum band services without a major spike in capital outlay.
