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In major shift, Rakuten plots to become Japan's No 4 wireless carrier

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Japanese e-commerce firm Rakuten said it would apply for a 4G mobile license, 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.

[TOKYO] Japanese e-commerce firm Rakuten said it would apply for a 4G mobile license, 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 and wants to secure at least 15 million subscribers.

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That 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 US$13.9 billion by market value, said it was preparing to raise as much as 600 billion yen (S$953.8 billion) by 2025 via interest-bearing debt such as bank borrowing to fund the move.

But analysts were sceptical about its 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 slid to be down 4.7 per cent in afternoon trade by those of Japan's biggest carriers NTT Docomo, KDDI and SoftBank all lost more than two per cent on the prospect of more competition.

"It won't be positive for any of the operators. SoftBank could be worst impacted - as the newest player, its customers could be most likely to switch over," said Mr Baker.

REUTERS

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