Japan’s mobile carriers are bracing for what might be the biggest industry shake-up in a decade after billionaire Hiroshi Mikitani’s Rakuten Inc unveiled plans to become the country’s fourth major mobile-phone operator.
The online retailer, which already operates a mobile service by leasing existing networks, yesterday said it plans to participate in upcoming government auctions to win its own wireless infrastructure.
Rakuten expects to raise as much as ¥600 billion (US$5.3 billion) by 2025 to fund the project, and attract at least 15 million subscribers after it launches in 2019, it said.
“Assuming the government allows this to proceed, it will be the biggest industry news since Softbank bought Vodafone in 2006,” said Koji Yoshimoto, head of Tokyo-based research firm MMD Labo. “Even with ¥600 billion, Rakuten probably can’t go it alone, so they’re likely to partner with perhaps NTT Docomo.”
Rakuten faces hurdles with its expansion into the highly saturated telecom market.
As of September, there were 1.3 mobile contracts in Japan for every citizen, data from the Telecommunications Carriers Association showed.
The company would also need to persuade existing customers to embrace its phone services.
Still, the move would be welcomed by the government, which has been pushing for more competition, analysts said.
In 2015, Japanese Prime Minister Shinzo Abe said mobile phone contracts were too expensive and called for them to be cut.
Since then, prices of phone-service contracts have fallen for 25 straight months, on a year-on-year basis. The government set up a task force, which pushed to increase competition by raising the number of mobile operators who do not have their own wireless network infrastructure.
Rakuten’s aggressive push into mobile is being driven by pressure from Jeff Bezos, whose Amazon.com Inc has been winning over Japanese customers through free shipping and online streaming, said Amir Anvarzadeh, head of Japanese equity sales at BGC Partners Inc in Singapore.
That has left Mikitani with little choice but to prop up cash flow by seeking ventures outside its main business, Anvarzadeh said.
Rakuten’s ability to meet its goal of 15 million subscribers might come down to further undercutting rivals, which they could have more freedom to do by winning the government auctions.
“Having their own infrastructure means they can be more aggressive with the pricing,” Anvarzadeh said.
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