Rakuten Mobile buys into the towers business

Rakuten Mobile is acquiring a stake in towers operator JTower, a move that should help it to roll out its network more quickly and cost-effectively.

Japan’s newest mobile operator said it has agreed to buy an undisclosed number of JTower shares from its president and chief executive Atsushi Tanaka for – wait for it – an undisclosed sum. As such, it will gain an equity stake in the company…but of course we don’t know what size of stake.

The deal will “strengthen cooperation and accelerate network development by promoting the utilization of infrastructure sharing,” Rakuten Mobile said, in a Japanese language statement.

The telco is already big on infrastructure sharing. According to JTower, which issued a very similar statement of its own, the capital alliance – as both companies are choosing to describe it – will help to promote infrastructure sharing both indoors and outdoors, using shared equipment and towers, mainly in 4G and 5G networks. Rakuten Mobile has been using JTower’s Infra-Sharing solutions since the start of 2020, it said, adding Tokyo-based smart poles into the mix in April this year.

“We and Rakuten Mobile will use this capital alliance as an opportunity to deepen our collaboration, and we will promote Infra-Sharing in indoors and outdoors using sharing equipment and sharing towers in the development of 4G and 5G networks, and work to build a more comfortable communication environment at an early stage,” JTower said.

JTower’s business model is built around the concept of network-sharing and it claims to be doing something that other global towers companies are not, although it does not fully articulate what that is. Nonetheless, the company did introduce something new to Japan when it launch nearly a decade ago, at a time at which infrastructure sharing was not the norm there. It has since announced a capital alliance with Japanese incumbent NTT, once again without sharing any of the financial details; all we know is that it was geared towards smoother 5G rollout.

Rakuten Mobile is also introducing something new to Japan – competition. The telco launched mobile services to rival those of NTT DoCoMo, KDDI and SoftBank – who had the market sewn up to the extent that they had attracted regulatory pressure to lower prices – in spring 2020 and appears to be making inroads into the market, although it is perhaps a little too early to tell. Its Q2 numbers this year showed hefty operating losses and only moderate growth in customer numbers following the end of its ‘first year free’ promotion. However, it has signed up 4.42 million customers to date and is confident of an uptick. Time will tell on that score.

That operating loss, understandably, stems in no small part from network rollout costs and the cost of roaming onto rivals’ networks. Both of those factors will be alleviated as the rollout progresses, and anything that can speed that up, like the JTower deal, has to be a good thing.