Japan’s e-commerce giant Rakuten Inc has offered a glimpse into its ambitious plan to build a cutting-edge wireless network to take on Masayoshi Son’s Softbank Group Corp, stay in the lead in mobile payments and win back market share from Amazon.com Inc.
The new mobile business, slated for debut next year, would tie together the company’s disparate portfolio of about 80 different services, chief operating officer Kentaro Hyakuno said in an interview.
The convenience of using one ID for everything from shopping and booking travel to paying the bills would attract new customers, as well as convince its more than 90 million registered users to spend more on the platform, he said.
Chief executive officer Hiroshi Mikitani pioneered online shopping in Japan when he started the Rakuten online marketplace more than two decades ago.
Since then, the company has lost ground to Amazon and has increasingly relied on financial services, such as credit cards and online banking, for growth.
While Mikitani’s plan to build Japan’s fourth-largest wireless operator would add another business where it does not have a leading market position, the company is betting the venture will serve as a platform for a collection of offerings no other competitor can match.
Rakuten would focus on three areas in the next two to four years: expanding its mobile-payment business, improving logistics for e-commerce customers and building a wireless carrier, Hyakuno said.
The Tokyo-based company is targeting ￥10 trillion (US$90 billion) in lifetime value, or the total amount its customers are estimated to spend minus the cost of acquiring them, compared with ￥4 trillion as of June.
Being a latecomer has its advantages, Hyakuno said.
Rakuten can save money because it does not need to maintain legacy equipment.
It can also benefit from the latest technological advances, such as radio antennae technology that offers better performance with a smaller footprint.
The company plans to reveal more details of its wireless network architecture within the next few months, Hyakuno said.
“The goal is very simple — how do we build the most disruptive network not just in Japan, but in the world,” chief technology officer Tareq Amin said at an earnings briefing on Aug. 6. “We are making tremendous progress. We are on schedule, on budget.”
Amin joined Rakuten in June, after more than five years at Reliance Jio Infocomm Ltd, an upstart carrier that in 2016 stormed India’s hyper-competitive wireless services market with free calls and data, forcing rivals to merge or exit.
Jio has amassed 215 million subscribers since then and has posted a profit for the past three quarters, partly because of the way it books costs for building its network.
“Having Amin, someone with real experience, comment with such confidence was very reassuring,” said Kazunori Ito, an analyst at Morningstar Investment Services in Tokyo. “Still, the true cost won’t become clear until they launch and you can actually judge the quality of the service.”
Rakuten plans to launch its wireless network in Tokyo, Osaka and Nagoya next year and expand coverage to 96 percent of the population by 2026.
Rakuten, which already offers mobile services as a virtual operator using NTT Docomo Inc’s network since 2014, has set a target of 15 million subscribers.
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