Billionaire Mikitani plans to build cell-phone network in Japan

[TOKYO] Billionaire Hiroshi Mikitani's Rakuten Inc plans to become the country's fourth big mobile-phone operator by announcing plans to build a network as the government pushes for greater competition.

The Tokyo-based company, which already operates a mobile service by leasing existing networks, said on Thursday it will participate in upcoming government auctions to win its own wireless infrastructure. Rakuten plans its raise as much as 600 billion yen (S$7.14 billion) by 2025 to fund the project, and attract at least 15 million subscribers after it launches in 2019, it said.

Rakuten said the move will make the market more competitive and lead to improvements in efficiency. The company said in a statement it was ideally positioned to provide affordable and easy-to-use mobile communications services.

The announcement is set to shake up Japan's telecom industry. Shares of SoftBank Group Corp dropped 2.8 per cent, while KDDI Corp lost 3 per cent and NTT Docomo Inc slipped 2.1 per cent. Shares of Rakuten slumped 2.9 per cent.

"Competition in Japan's wireless market is only going to get more fierce as it has in the US," said Amir Anvarzadeh, head of Japanese equity sales at BGC Partners Inc in Singapore. "The Japanese authorities were already putting pressure on existing carriers to cut tariffs, so having Rakuten coming into the market is heaven sent."

In 2015, Prime Minister Shinzo Abe said mobile phone contracts were too expensive and called for them to be cut. Since then, prices of phone-service contracts have fallen for 25 straight months, on a year-on year basis.

The government set up a task force which pushed to increase competition by raising the number of mobile operators who don't have their own wireless network infrastructure.

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