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Rakuten acquires another MVNO to scale up its mobile business

As the US and Chinese cloud providers explore ways to find their way into the 5G networks business, Rakuten of Japan has taken the most direct route of all – acquiring spectrum becoming an MNO. The company has attracted a lot of attention for its plans to deploy fully cloud-native 4G and 5G networks with help from a raft of vendors, but its business model is even more creative.

The company already has an MVNO deal and is now becoming a fully-fledged MNO, but not because mobile broadband subscriptions will enhance its cloud and content revenues significantly. Instead, the aim is clearly to give it full control of the user experience for services which are growing rapidly on mobile systems, such as financial services – its third biggest revenue stream after cloud and video. It will also be able to offer enterprise customers a combined cloud/connectivity platform to enable their own new services. It is even cooperating with another MNO, KDDI, supporting the larger telco’s own move into financial applications in return for roaming rights.

The cloud model relies on scale, of course, and one advantage of its cloud-native approach will be to roll out nationwide mobile networks relatively quickly and cheaply, says Rakuten. It is also scaling up through acquisition, announcing that it will pay JPY2.3bn ($21.1m) for businesses operated by ecommerce and web company DMM.com, which will boost Rakuten’s mobile subscriber base by about 260,000 users.

The deal covers two DMM units – its MVNO and its virtual internet service, DMM Hikari. The former uses NTT Docomo’s 3G and 4G networks and had around 240,000 subscribers as of the end of June, while the web service runs on fiber operated by NTT Hikari, with about 20,000 users. This is not just about user numbers but about tying more people tightly into Rakuten services and user experience, the main motivation for becoming an MNO. The company said it was working to “maximize synergy with the other services and businesses in the Rakuten Ecosystem”, including loyalty schemes, for DMM customers.

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