The greenfield operator has not made quite the impact it had hoped in the Japanese market, but it is not done yet
Rakuten Mobile has been touted as one of the world’s most disruptive operators this year, attempting to burst onto the Japanese telecoms scene with its fully virtualised RAN. However, the company has not made quite the splash it would have hoped, with the company’s Q3 results showing the company’s growth to be disappointing.
In an earnings call which took place on Wednesday, Rakuten Mobile’s CTO Tareq Amin explained that the company had roughly 1.6 million customers subscribed to its service. This is a total that is unlikely to have Japan’s rival telcos quaking in their boots – NTT DoCoMo boasts around 75 million subscribers and even the smallest of the big three, SoftBank, has over 23 million. Even worse, it is likely that Rakuten is making very little money from these subscribers at present, having offered the first three million subscribers free service for a year back when the company launched 4G commercially in April.
Part of the issue here is likely availability. Rakuten’s deployments outside of Tokyo, Osaka, and Nagoya are slim, with customers forcibly reliant on a roaming deal with KDDI.
Regardless of the reasoning for its non-stellar first year, it is clear that something has to change. Rakuten Mobile is currently haemorrhaging funds for the Rakuten group, recording an operating loss of around $500 million, a sum large enough to more than consume the overall profit from Rakuten’s e-commerce and fintech businesses.
As a result, the operator is redoubling its efforts to expand its network coverage, now targetting 96% of Japan’s population by the end of 2021. The company plans to achieve this by rapidly rolling out 45,000 sites; this total number of sites is reportedly less than half that of its major rivals, as a result of Rakuten’s innovations in network architecture leading to 30–40% increased coverage per site, according to Amin.
Nonetheless, the pace of the rollout will still need to be impressive, with Rakuten reportedly doubling their monthly deployment targets to round 1,500 sites.
"We felt if you compare the cost of roaming and how much we pay for roaming, the acceleration of the build plan by five years has a significant return on investment to Rakuten," explained Amin.
So far, Rakuten Mobile have failed to make the immediate impact on the Japanese market that they had hoped but, with with such a major rollout in the works, their disruptive potential could still be realised.