In 2020, Rakuten (4755.T) entered Japan’s telecom sector with a mobile service network, aiming to disrupt the third-largest market. Despite some success, the endeavor significantly affected its finances. Rakuten Mobile encountered considerable hurdles, resulting in significant financial setbacks. The intended creation of a cost-effective network using cloud-based software and affordable hardware encountered obstacles, leading to escalated infrastructure expenses, network disruptions, and reputational damage due to a rushed deployment.

Consequently, Rakuten’s parent company endured consecutive operating losses totaling around $5.5 billion over 13 quarters, coupled with impending debt obligations, with $5.4 billion due within the next two years. In 2024, Rakuten faces the daunting task of achieving break-even for its mobile unit, a goal that hinges on substantial increases in subscriber numbers and average revenue per user (ARPU). This challenge comes amidst fierce competition employing aggressive pricing strategies. Despite these obstacles, Rakuten remains committed to its goals, aiming to refinance its debt and bolster its financial standing while navigating potential economic uncertainties that could further impact its stability. The company’s resilience stems partly from its other thriving businesses; its core e-commerce arm competes strongly with Amazon Japan, while its online financial services units continue to bolster profits. To address its financial situation, Rakuten has taken strategic steps since 2021, including issuing new shares, selling portions of its holdings in Rakuten Securities, and listing Rakuten Bank (5838.T). These measures have generated approximately 800 billion yen ($5.4 billion). Analysts speculate that Rakuten Card might be the next entity to go public, considering its central role in Rakuten’s ecosystem, attracting customers from e-commerce to other services through a points program that offers various benefits for users.