Rakuten Mobile loses close to $1 billion in Q3

Rakuten Mobile is growing its customer base, but the cost of building a new national mobile network is still taking a significant toll on its finances.

Revenues are ticking up at Japan’s fourth mobile operator as it starts to attract paying customers. Its topline came in at close to 55 billion yen in the three months to the end of September, a 21% on the third quarter of last year. The numbers refer to Rakuten’s overall mobile segment, the bulk of which comes from its core mobile operator business. But its operating loss was 44% greater than in the same period a year ago at JPY105 billion (US$924 million).

Ouch. But the figure comes as no real surprise. The losses have been gradually mounting at Rakuten Mobile, and the company made it clear earlier this year that they would continue for at least a few quarters. Speaking at the Q1 results presentation in May, Rakuten Mobile president Yoshihisa Yamada predicted that losses will “decline gradually” from 2022 onwards, with a target of breakeven in fiscal 2023.

The global chip supply shortage is doing little for Rakuten’s rollout plans, but it still expects its figures to improve next year. However, it is now talking about the second quarter of next year.

In the meantime, customers are still being drawn to the market newcomer, despite the fact that its free mobile service for a year campaign came to an end earlier this year.

The operator had 5.1 million mobile subscribers as of the end of September, fewer than 1 million of which were still using its old MVNO service. It added close to 2 million customers over 12 months, which is a creditable number, if not a huge amount in a country with over 120 million people. By contrast, market leader NTT DoCoMo had over 83 million at the same date – including close to 7 million 5G subs, incidentally – but nonetheless, Rakuten is growing steadily and is proving a credible competitor to the big three, which have certainly changed their behaviour as a result of its entry into the market.

As well as bringing in customers, Rakuten is working hard on that aforementioned network rollout, which, while expensive in itself, will help the firm reduce its – also costly – reliance on its roaming deal with KDDI.

“In line with the continued expansion of the Rakuten Mobile network service area, which is proceeding ahead of schedule, progress has been made in 39 prefectures since October to switch from the roaming service to Rakuten’s network,” the company said. “As the Rakuten service area continues to expand, improvement in earnings is expected from Q2 FY2022 onwards.”

Until then, it seems we’re looking at more of the same from Rakuten Mobile.

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