Rakuten plots to become Japan’s No. 4 wireless carrier

TOKYO: Japanese e-commerce firm Rakuten Inc said it would apply for a 4G mobile licence, aiming to become the country's fourth major wireless carrier in a strategic shift that had analysts warning of an uphill battle to gain customers.

Rakuten, which operates one of Japan's most popular shopping websites, said it hoped to gain a new engine of growth, adding that having a mobile licence would complement its e-commerce, streaming and fintech services such as online securities trading.

"There is no doubt that mobile devices are the most important user touchpoint for the expansion of existing services and new service development," it said in a statement. Rakuten said it aims to start offering mobile services in 2019. It also wants to secure at least 15 million subscribers although it didn't specify a timeframe for that goal.

By comparison, SoftBank Group, Japan´s No. 3 carrier has about 39 million subscribers. Rakuten's target would be a major jump up from the roughly 1.4 million customers it has through its mobile virtual network service where it rents network space from companies holding licences.

The auction for 4G wireless spectrum is due to be held in January, with results expected by end-March. Rakuten, worth some $13.9 billion by market value, said it was preparing to raise as much as 600 billion yen ($5.3 billion) by 2025 via interest-bearing debt such as bank borrowing to fund the move.

But several analysts were sceptical about its wireless prospects. "I don't like their chances - the market is pretty much fully penetrated," said Dan Baker, an analyst at Morningstar in Hong Kong. "It would have to fund the network build-out and customer acquisition, and then its operating losses until it could get enough customers."

Shares in Rakuten closed down 4.9 percent, their lowest since March, while those of Japan's biggest carriers NTT Docomo Inc, KDDI Corp and SoftBank all lost more than 2 percent on the prospect of more competition.