TOKYO (Reuters) – Japan’s Rakuten Group has announced plans to invest 54.4 billion yen ($362.81 million) in the construction of cellular base stations. This comes after the government granted the company’s carrier better frequency for connection, potentially providing a much-needed boost to Rakuten’s struggling mobile phone business.
With this investment, Rakuten aims to establish 10,661 base stations for the “platinum band” frequency. The company anticipates that its cell phone business will become profitable by 2026.
Despite the significant investment, Rakuten remains committed to reducing capital expenditure by approximately 300 billion yen between 2023 and 2025, according to a spokesperson.
The company’s mobile phone business has faced challenges in gaining market share from established players with robust networks and substantial financial resources.
The decision to allocate better frequency for connection to Rakuten’s carrier could provide the company with a competitive advantage in terms of network performance, potentially attracting more customers.
Currently, Rakuten’s mobile phone business is operating at a loss. The construction of additional base stations and improved frequency allocation are crucial steps in the company’s strategy to turn profitability in this sector.
Rakuten’s expansion into the mobile phone market is part of its broader goal to diversify its operations beyond its e-commerce business. By investing in infrastructure and network capabilities, the company aims to position itself as a major player in the telecommunication industry.
The announcement of this investment demonstrates Rakuten’s commitment to the long-term success of its mobile phone business, despite the initial challenges it has faced.
The investment in base stations and the anticipation of profitability by 2026 indicate Rakuten’s confidence in its ability to compete with established incumbents in the Japanese mobile phone market.
Overall, this strategic move by Rakuten highlights the company’s determination to carve out a larger share of the mobile phone market and attain profitability in this sector.
($1 = 149.9400 yen)
Reporting by Satoshi Sugiyama; Additional reporting by Miho Uranaka; editing by Barbara Lewis
