Rakuten Invests $363 Million to Boost Mobile Network
Japanese e-commerce giant Rakuten Group (4755.T) announced on Monday that it will invest 54.4 billion yen ($363 million) to construct cellular base stations in Japan. The move comes just after the Japanese government assigned the company's carrier a better frequency for connection, known as the "platinum band."
Rakuten's mobile phone business has struggled to take market share from cash-rich incumbents like NTT Docomo and KDDI, which are known for their high-quality networks. However, the company believes that investing in the platinum band frequency will allow it to improve its network coverage and speed, and ultimately make its mobile phone business more competitive.
Rakuten plans to open 10,661 base stations for the platinum band frequency and expects its cell phone business to turn profitable in 2026. The company is also sticking to a plan to reduce capital expenditure by about 300 billion yen between 2023 and 2025.
Analysis
Rakuten's investment in the platinum band frequency is a significant step forward for the company's mobile phone business. The platinum band is known for its excellent propagation characteristics, which means that it can travel further and penetrate buildings more easily than other frequencies. This will allow Rakuten to improve its network coverage and speed, which are two key factors that consumers consider when choosing a mobile phone carrier.
The company's goal of turning its mobile phone business profitable in 2026 is ambitious, but it is achievable. Rakuten has a number of advantages over its competitors, such as its strong brand recognition and its large customer base. The company is also investing heavily in new technologies, such as 5G, which is expected to drive significant growth in the mobile phone market in the coming years.
Overall, Rakuten's investment in the platinum band frequency is a positive development for the company's mobile phone business. The move shows that Rakuten is committed to improving its network and becoming a more competitive player in the Japanese mobile phone market.