Hiroshi Mikitani, Chairman and CEO of Japanese e-commerce group Rakuten, has said that the company will forge ahead with its fledgling mobile telecommunications venture despite posting a ‘record loss’ as a result of heavy investment costs in Rakuten Mobile. The Nikkei reports that the e-commerce firm booked a net loss of JPY114.2 billion (USD1.1 billion) in FY20, up from a loss of JPY31.9 billion in the previous year and worse than analysts’ forecasts of JPY94.5 billion (according to S&P Capital IQ). The group’s revenue increased 15% year-on-year to an all-time high of JPY1.46 trillion aided by strong performances from its e-commerce and financial services units, but Rakuten Mobile – which entered the domestic market in April 2020 – reported a massive USD2.1 billion loss, wiping out the group’s other profits in the process. Rakuten expects losses from the nascent wireless carrier to widen in fiscal 2021 before ‘decreasing next year’, and in an online conference Mikitani bullishly proclaimed ‘we have no intention to stay in the number four position’ adding that the company has almost 22 million credit card users and wants to reach a position where it has more mobile users than credit card holders. With subscriptions for Rakuten Mobile reaching 2.5 million applications at 8 February 2021, Mikitani confirmed Rakuten’s ambitious target to create a strong new revenue stream for the group, but the Nikkei notes its sizeable CAPEX is already shaking investor confidence.
Last Friday, Rakuten said that it is ramping up its mobile rollout, upping its initial CAPEX of JPY600 billion by between 30% and 40%, to install more base stations across Japan. Mikitani is quoted as saying that the mobile business ‘would break even at around seven million subscribers, a target it expects to reach in 2023’ but it faces stiff competition from the big three – DOCOMO, KDDI (au) and SoftBank Corp – especially in the wake of new Prime Minister Yoshihide Suga’s call for a cut in mobile fees, which has intensified competition still further.