Rakuten Mobile racks up another quarter of losses

Rakuten's business model for communication service providers includes end-to-end solutions and individual software solutions. (Pixabay)

Rakuten Group’s mobile ambitions are big, but the Japanese company is not yet seeing the full financial benefits of its strategy.

Rakuten on Wednesday reported a 29.4% year-on-year increase in mobile revenues, but segment losses continued to add up.

Operating losses were 89.23 billion yen (around $808 million) in the six months ended June 30, 2020, compared with more than 197.3 billion yen ($1.78 billion) in the six months ended June 30, 2021. Rakuten Mobile reported 4.42 million subscribers as of this past June.

The company has made the sale of its Rakuten Communications Platform (RCP) a cornerstone of its strategy, targeting both incumbent mobile service providers and new entrants. For the Americas, the company counts four existing customers and 27 interactions with potential customers.

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The biggest investment in building a network is not the network core but for the base stations, and finding ways to keep costs down on the base stations is key, according to the company.

Rakuten believes it has found the answer through the acquisition of Altiostar, the U.S. business that it’s acquiring for more than $1 billion. Rakuten was an existing investor in Altiostar, which already offers its suite of open virtual radio access network (vRAN) network functions on the RCP. 

Rakuten’s purchase of Altiostar was one of the big events the company reported in the most recent quarter. It also announced a 10-year contract to build its first cloud-native mobile network in Europe, for 1&1 in Germany, and the launch of its new Rakuten Symphony business.

RELATED: Rakuten to acquire open RAN vendor Altiostar

In a video presentation, Chairman and CEO Mickey Mikitani said they’re trying to hit three birds with one stone through their triangle strategy. One is the stand-alone Rakuten mobile subscription business with an aggressive price plan. Second is by nurturing the Rakuten ecosystem and a third is by going global with the Rakuten Mobile Platform.

RCP’s business model includes end-to-end solutions and individual software solutions. In five to 10 years, it’s possible that they will see RCP’s revenue and profit outpace its other businesses, he suggested.

Rakuten’s greenfield build of virtualized 4G network went live in April 2020, followed by 5G five months later.