Japan’s Amazon Planning Cell Phone Network of its Own

Rakuten said on Thursday in a prepared statement it is planning to build a mobile network and hopes to launch services during 2010 and eventually have a minimum of 15 million subscribers.

It is a big bold move by a company that began only 20 years ago with six employees, Rakuten is now an internet giant worth $14 billion that employs over 14,000 people.

Like Amazon, its counterpart in the U.S., Rakuten is known for the internet shopping portals it has. Run by Hiroshi Mikitani its billionaire founder, Rakuten has its hand in several other services including messaging apps, payment services and video streaming.

The announcement of the wireless ambitions of Rakuten comes during a time when many wireless carriers across the globe are attempting to build their businesses of digital content as they search for alternate revenue streams.

Verizon recently acquired Yahoo, while AT&T is attempting to take over Time Warner. At the same time, one of the top wireless providers in Japan, Softbank is aggressively investing in technology and internet companies across the globe.

Rakuten is attempting to move in the opposite direction.

The company said moving into wireless would give it another engine for more growth and would make it one of just a few businesses worldwide that could provide a comprehensive package of services on internet finance, e-commerce, mobile communications and digital content.

However, Rakuten will be facing stiff competition taking on the likes of Softbank, and two other carriers that dominated the market in Japan, KDDI and NTT DoCoMo.

Those three businesses are far bigger in size than Rakuten, which would have to invest heavily to build out its network across all of Japan.

On Thursday, Rakuten estimated that it would need to borrow up to 600 billion yen equal to $5.3 billion over the coming years so it could pay for the plans.

Investors were unsettled by the Rakuten announcement evidenced by shares dropping close to 5% on Thursday in Tokyo.

The government of Japan and other critics repeatedly have slammed the three big carriers in the country over prices skyrocketing, pressing the three to offer less expensive plans.

Rakuten believes it can be a difference maker if the central government decided to give it a part of the available 4G frequencies.

Rakuten has already had some experience with the industry. It launched in 2015 Rakuten Mobile but it involves renting capacity on the network of DoCoMo and not its own.


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