Rakuten touts online user base in bid for Japan's mobile market

Tokyo-based e-commerce operator plans to apply for 4G frequencies, which will be made available by the Japanese government in March 2018, and invest up to US$5.29 billion to build out the required infrastructure.

Rakuten has unveiled plans to acquire 4G spectrum and start offering mobile services in Japan, putting in 200 billion yen (US$1.76 billion) to roll out the necessary infrastructure.

The Tokyo-based e-commerce operator would apply for 1.7 GHz band and 3.4 GHz band frequencies when these were made available by the country's Ministry of Internal Affairs and Communications (MIC). This was slated to take place in March 2018.

If successful in its bid for a 4G mobile license, Rakuten would become Japan's fourth wireless carrier and have to compete against NTT Docomo, SoftBank, and KDDI.

In its statement Thursday, Rakuten underscored the need to introduce competition in a market that was monopolised by existing players. "In Japan, the proportion of household spending taken up by telecommunication expenses is rising each year, and the reduction of the financial burden on consumers of mobile phones and other communications expenses is often cited to be a major social issue.

"In addition, as the current MNO (Mobile Network Operator) market is criticised as a coordinated oligopoly among existing operators, the government is in the midst of a thorough industry review aimed at ensuring fair competition and the protection of consumer interests," it said, adding that its potential entry into the market would bring about more competitive and improved services.

If successful in its bid, Rakuten said it would set up a new business entity and begin offering services in 2019, with a goal to amass at least 15 million subscribers.

To fund its deployment of the necessary infrastructure, including base stations, it estimated that it would invest an initial 200 billion yen (US$1.76 billion) to start delivering services in 2019 and up to 600 billion yen (US$5.29 billion) by 2025.

Rakuten said its potential entry into the mobile carrier market would provide a "new engine for further growth" for the company and valuable addition to its current portfolio of services, which included e-commerce, online travel, online banking, messaging apps, and payments.

Pointing to its base of more than 1.2 billion users worldwide, it touted the possibility of offering subscribers "affordable and easy-to-use mobile communications packages" bundled with online shopping, streaming services, video ads, and payment options. It also had almost 100 million customer IDs in Japan, spanning its online and offline services.

According to Rakuten, mobile transactions already accounted for more than 60 percent of total transactions on its e-commerce site, Rakuten Ichiba.

It, however, had less luck penetrating the region's e-commerce markets. The Japanese vendor in March last year shuttered its online marketplaces in Singapore, Indonesia, and Malaysia.