rakuten mobile business plan

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Rakuten mobile passes 5m subscribers rakuten mobile passes 5m subscribers.

Rakuten Mobile has added more than 5 million subscribers since launching its mobile carrier service in April 2020. #pressrelease

August 28, 2023

TOKYO – Rakuten Mobile, Inc. today announced that the number of subscribers for its mobile carrier service has surpassed 5 million as of August 28, 2023*1.

Since the full-scale launch of its mobile carrier service in April 2020, Rakuten Mobile has continued on its mission to democratize the mobile industry, offering an affordable and simple service plan while expanding the Rakuten network area through the build-out of base stations and roaming agreements. Since January of this year, Rakuten Mobile has also offered simple-to-use service plans for business customers through the Rakuten Mobile Business Plan, as the company takes its mission to the corporate mobile industry.

In addition, the company has focused on expanding its range of services in order to enhance the customer experience. These initiatives include the Rakuten SAIKYO Plan (Data Type), which allows customers to start using the service in as little as three minutes,and the introduction of the Mobile Number Portability (MNP) One-Stop system that eliminates the need for customers to issue their own MNP reservation number when switching mobile phone carriers*2*3.

The Rakuten SAIKYO Plan – available since June 2023 – does away with the previous limit on high-speed data capacity in the domestic roaming partner network area, offering unlimited high-speed data usage in network areas nationwide with a 99.9% 4G population coverage ratio*4, including both the Rakuten network area and the domestic roaming partner network area*5.

As with the previous Rakuten UN-LIMIT VII plan, it features a simple fee structure that flexibly adjusts in line with data usage. Monthly plan fees range from 980 yen (1,078 yen including tax) for monthly data usage of up to 3GB, 1,980 yen (2,178 yen including tax) for usage of more than 3GB and up to 20GB, and 2,980 yen (3,278 yen including tax) for unlimited usage over 20GB. In addition, with the Rakuten Link app available exclusively to plan subscribers, users can make domestic calls and send and receive SMS messages for free*6. With the launch of the beta version of Rakuten Link Desktop, customers can also enjoy select Rakuten Link features on their personal computer from August 2023.

Rakuten Mobile will continue its efforts to improve the quality of communication it provides and expand its range of services so that customers can enjoy comfortable and convenient communication services anywhere.

*1 The number includes both Rakuten SAIKYO Plan and Rakuten Mobile Business Plan subscribers.

*2 MNP One-Stop is a system that allows mobile phone users to switch mobile phone carriers without changing their phone number.

*3 Rakuten SAIKYO Plan (Data Type) customers can only use data. Calls are not available.

*4 The population coverage ratio is calculated based on the number of the approximately 500m zones used in the national census in which communication is possible in more than 50% of the area covered.

*5 To provide services fairly, restrictions on transmission speed may be implemented. Additionally, transmission speeds may slow depending on the environment in use at the time.

*6 Does not apply to phone numbers for connection services provided by other companies that start with 0570 and some hotline numbers (188). Please check the list of numbers below. Calls cost 22 yen per 30 seconds when not using the app (includes tax). https://network.mobile.rakuten.co.jp/faq/detail/00001887/ (*Japanese page)

*Product names and service names published in this press release are generally trademarks or registered trademarks of their respective companies. Trademarks such as TM and ® may be omitted when trademarks are listed in this press release.

Read the full press release here . Rakuten Mobile

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Rakuten Mobile attracts over 3.9 million applications for its mobile offering

Japanese carrier Rakuten Mobile said it attracted over 3.9 million applications for its mobile service since it launched its 4G offering one year ago.

The telco launched a new promotional campaign to attract more subscribers. This campaign offers the Rakuten UN-LIMIT VI service plan to customers free of charge for the first three months of service.

The total number of Rakuten Mobile contracts, including MVNO contracts, has now reached 4.5 million.

“Since full-scale commercial launch of its mobile service in April 2020, Rakuten Mobile has carried out various measures to improve the quality of its service, including upgrading the service plan, expanding its network area, and increasing the number of Rakuten Mobile shops and lineup of original devices and products compatible with its network,” the telco said in a release.

Rakuten Mobile had deployed over 11,500 base stations for a population coverage of 73.5%. The Japanese operator aims to increase this coverage to 96% by the middle of the year.

Rakuten Mobile’s total obligation, agreed upon with the Japanese Ministry of Internal Affairs and Communications (MIC), is to deploy 15,787 sub-6 GHz base stations and 7,948 mmWave base stations. The carrier had agreed to deploy at least 667 sub-6 GHz and 441 mmWave base stations by the end of March 2021.

In September 2020, Rakuten Mobile launched 5G services in parts of Tokyo, Kanagawa, Saitama, Hokkaido, Osaka and Hyogo. The service is being initially offered via Non-Stand Alone (NSA) 5G architecture.

Rakuten Mobile’s President Yoshihisa Yamada had previously said that the operator was expecting the 5G to be available in Japan’s all 47 prefectures by end-March 2021.

Yamada had also said that Rakuten Mobile expected to launch a Stand-Alone 5G network in the second quarter of 2021.

In June 2020, Rakuten Mobile and NEC Corporation announced that the two companies had reached an agreement to jointly develop the containerized standalone (SA) 5G core network (5GC) to be used in Rakuten Mobile’s fully virtualized cloud native 5G network.

Under the terms of the deal, Rakuten Mobile and NEC said they will develop the containerized SA 5G mobile core to be made available on the Rakuten Communications Platform (RCP).

Rakuten’s platform contains all the elements of the Rakuten Mobile network, including telco applications and software from multiple vendors, OSS and BSS systems handling customer billing and activation systems, in addition to edge computing and virtual network management functions.

RCP is aimed at offering solutions and services for the deployment of virtualized networks at speed and low cost by telecom companies, enterprises and governments around the world, the telco said.

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Rakuten's mobile misadventure: from ambitious plan to millstone

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• Rakuten Group, Inc.

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• Rakuten : Mobile Surpasses 7 Million Mobile Carrier Service Subscribers
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Tokyo, June 17, 2024 - Rakuten Mobile, Inc. today announced that the number of subscribers for its mobile carrier service has surpassed 7 million as of June 16, 2024 *1 . 500,000 subscribers were added in just over two months since the 6.5 million milestone, marking the largest ever three-month net increase in subscribers since the launch of the Rakuten UN-LIMIT VII plan *2*3 .

Since the full-scale launch of its mobile carrier service in April 2020, Rakuten Mobile has continued on its mission to democratize the mobile industry, offering an affordable and simple service plan while expanding the Rakuten network area through the build-out of base stations and roaming agreements.

Rakuten Mobile has broadened its appeal to customers by expanding its service offerings, launching the Saikyo Kids Program in May 2024, which rewards customers aged 12 and under with 440 Rakuten Points each month if their monthly data usage is 3GB or less *4,5,6,7,8 . Together with the Saikyo Family Program and Saikyo Youth Program launched this spring, Rakuten Mobile now provides even more affordable mobile services to a wide range of demographics.

For corporate customers, Rakuten Mobile continues to leverage the strengths of the Rakuten Group to provide services tailored to business needs. In April 2024, the company introduced the Rakuten Mobile Buddycom Set, a special discount package combining Rakuten Saikyo Plan Business with a wireless communications app for accommodation facilities registered with Rakuten Travel, a leader in digital transformation for the travel industry. With the advent of such initiatives, the Rakuten Saikyo Plan Business has been well received by partner companies from Rakuten Travel, Rakuten Ichiba and across the Rakuten Ecosystem. In addition to service expansion, Rakuten Mobile is working to continuously improve network quality. In recognition of these efforts, in April 2024, the company was named by Opensignal, global provider of network experience and market performance insights, as Japan's leading mobile network service provider across five network performance areas *9 . On April 30, 2024, the company started radio frequency testing for the 700 MHz spectrum, also known as the "platinum band." *10 Upon completion, the company aims to roll out commercial service using the 700 MHz band on its own base stations, starting with urban areas. Rakuten Mobile will continue its efforts to improve network quality and expand its range of services so that all customers, from families to corporate clients, can enjoy best-in-class mobile services anywhere in Japan. Website Rakuten Mobile official site

Notes *1 The 7 million subscribers number includes Rakuten Saikyo Plan, Rakuten Saikyo Plan Business, Rakuten Turbo subscribers and Mobile Virtual Network Enabler (MVNE) service customers (approx. 200,000 lines) as of June 16, 2024. The number of subscribers in this press release does not include BCP customers. (BCP is the B2B pricing plan for Business Continuity Plan purposes.) *2 From Friday, July 1, 2022, the service was updated from Rakuten UN-LIMIT VI, which was available for a monthly fee of 0 yen to 2,980 yen (3,278 yen including tax), to Rakuten UN-LIMIT VII (now the Rakuten Saikyo Plan), which is available for a monthly fee of 980 yen (1,078 yen including tax) to 2,980 yen (3,278 yen including tax) and includes benefits for Rakuten Group services such as NBA Rakuten. *3 The three-month period from March to May 2024 saw the largest-ever net increase in mobile carrier service subscribers, including Rakuten Turbo subscribers but excluding BCP customers, Rakuten Saikyo Plan Business, and MVNE customers. *4 Points awarded every month until the month before the customer turns 13 years old. 440 Rakuten Points are awarded if the monthly data usage is 3 GB or less. If monthly data usage exceeds 3 GB, 110 Rakuten Points are awarded. *5 Rakuten Saikyo Plan (Data Type) and Apple Watch Family Sharing customers are not eligible for this program. *6 The Saikyo Kids Program is applicable until the month prior to the month of the 13 th birthday. In conjunction with the launch of the Saikyo Kids Program, the eligibility age for the Saikyo Youth Program is now 13 to 22 years of age. When a customer using the Saikyo Kids Program turns 13 years old, the Saikyo Youth Program will be automatically applied. The Saikyo Kids Program will be automatically applied to customers under 12 years old who are using the Saikyo Youth Program. For more details on the Saikyo Youth Program visit the official site: https://network.mobile.rakuten.co.jp/fee/youth/en/ *7 For customers with multiple lines, only one line is eligible for this program. *8 The Rakuten Points awarded are limited time points. Monthly points are awarded around the end of the month after the next month following the one in which the customer's entry is confirmed from the official program page. *9 Information based on Opensignal's Japan Mobile Network Experience Report, published in April 2024, using data from December 1, 2023 to February 28, 2024. The full report is available on the Opensignal website: https://www.opensignal.com/reports/2024/04/japan/mobile-network-experience *10 Press Release: Rakuten Mobile Commences Radio Frequency Testing for 700 MHz "Platinum Band" (April 30, 2024) https://corp.mobile.rakuten.co.jp/english/news/press/2024/0430_01/

*Product names and service names published in this press release are generally trademarks or registered trademarks of their respective companies. Trademarks such as TM and ® may be omitted when trademarks are listed in this press release.

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How Does Rakuten Make Money? Dissecting Its Business Model (2024)

Executive Summary:

Rakuten makes money from various internet service portals, personal finance solutions, mobile plans, venture investments, and much more.

The business model of Rakuten is predicated on creating an ecosystem around the 70+ businesses it runs.

What Is Rakuten?

Rakuten, which stands for “optimism” in Japanese, is a technology conglomerate that serves users in 30 countries across the globe.

The Rakuten Group boasts 70+ businesses and 1.6 billion members worldwide. Its businesses span a broad range of online and offline services such as:

• Digital content
• FinTech including banking, credit cards, securities, and insurance
• Communications such as mobile carrier service or streaming

Most consumers in the United States, which the company entered in 2000, know Rakuten as a platform where one can earn cashback rewards.

That service alone works together with 3,5000 retailers and has facilitated close to $4 billion in cashback returned, on top of closing sponsorship deals with the likes of Steph Curry.

However, the firm’s core business remains situated in e-commerce via a Japan-based marketplace called Rakuten Ichiba . That platform alone counts over 111 million members, which is particularly impressive given that Japan’s population totals 126 million people.

Rakuten, much like its Japanese contemporary SoftBank, is also an investor in a variety of other companies including Acorns , Lyft, Pinterest , and many others.

The company, which is headquartered in Tokyo, Japan, was founded back in 1997 by Hiroshi Mikitani.

He was heavily inspired by the likes of Amazon and eBay when he started what was initially called MDM. Said firm was then rebranded into Rakuten two years after and taken public on the JASDAQ in 2000.

He has since expanded Rakuten’s focus from e-commerce to all kinds of associated businesses. The business model strategy behind that pivot will thus be covered in the next chapter.

The Rakuten Business Model Explained

As previously stated, Rakuten began life as an online marketplace that connected buyers with sellers.

However, competitive threats, namely the entry of both Amazon and eBay into Japan in the early 2000s, forced Mikitani to rethink Rakuten’s business model strategy .

By the mid-2000s, Rakuten began to a) expand outside of Japan and b) add ancillary business lines such as a company-branded credit card. The majority of said expansion was achieved in the form of acquisitions and joint ventures.

One of Rakuten’s most notable acquisitions to this date is its 2014 purchase of Ebates , which it bought for $1 billion. The acquisition solidified Rakuten’s cashback business in the United States and beyond. And just a few months prior, it had acquired messaging app Viber for roughly the same amount after missing out on WhatsApp, which had been bought out by Facebook.

All of those acquisitions and subsidiaries are now directly tied to Rakuten’s ecosystem-based business model.

Founder Mikitani first outlined that strategy in an interview with CNBC back in April 2018. “In the future, we’re going to see the conversion of network platforms and content and transactions,” he told CNBC’s Akiko Fujita. He then doubled down on that take by saying that “it’s all about ecosystem.”

At the core of that ecosystem approach stands the Rakuten brand, which is adapted by almost all of the company’s 70+ business lines.

Whether it’s Viki (streaming) or Kobo (books), Rakuten’s brand is always tied to any business that is launched. This creates substantially more trust from the get-go and allows Rakuten to generate demand almost instantaneously.

Those diverse, and at times not even related, services are then linked vis-à-vis a common membership and loyalty program. By accessing these offerings, whether that’s streaming content or booking a flight, members can earn Rakuten Points.

Each user is given a unique Rakuten member ID that is linked across all of its services. A similar approach has been championed by Amazon via its Prime program, which grants customers access to free deliveries as well as streaming or audio content, among many other benefits.

That ecosystem approach offers a few key distinct advantages. First, it significantly decreases Rakuten’s customer acquisition costs. Instead of having to promote a new service by purchasing expensive ads on Google, Facebook, or even TV, it can simply advertise it through its different business units.

For example, Rakuten heavily endorses its other services, namely its credit card, travel marketplace, wallet, and even mobile carrier, on the Ichiba marketplace.

Paying less to acquire customers consequently boosts the firm’s margins, which it can then invest into the launch or expansion of other business lines.

It has to be noted, though, that there’s at least some opportunity cost involved as Rakuten cannot generate revenue from (banner) advertising that this slot could potentially yield.

Conversely, the second major advantage of the ecosystem approach is that it maximizes the lifetime value of each customer. The reason why banking or insurance companies pay so much to acquire members is that they often remain loyal for years or even decades at a time.

Similarly, the more associated services Rakuten is able to offer, the likelier a customer is to stick around. And the longer he or she sticks around, the greater the chance of them opting into one of those offerings – again, at no cost to Rakuten since it acquired the customer for essentially free.

Additionally, the more users access Rakuten’s varying services, the more the company learns about their spending patterns, financial situations, and the like. This then enables Rakuten to show consumers more relevant ads from its own and third-party services.

For instance, if it sees that a customer is purchasing dog food, collars, and so forth, it can offer them insurance for their pet (a service that it launched in 2021). And again, members are incentivized to join because they’ll be earning rewards points.

In 2021 alone, Rakuten issued over 530 billion points , which is equal to about $4.6 billion. And customers used 90 percent of their points, which points towards high engagement as well as the relevance of the products and services that the company provides.

The data that Rakuten generates not only allows them to show more relevant ads but also helps the company to determine what business lines to enter. The launch of its pet insurance and membership programs was likely informed by purchasing behavior observed on its marketplace and via the credit card, among other channels.

Consequently, Rakuten can utilize the learnings from one business unit to apply them to another, especially considering that the technology stack across its various platforms should be fairly identical. 

Yet another key benefit is the diversification that Rakuten achieved. For example, the Covid-19 pandemic eroded earnings from its travel product overnight. However, e-commerce simply picked up the slack as consumers shifted their buying behavior towards online shopping.

However, the ecosystem approach also boasts a few disadvantages. Currently, Rakuten is building up a whole new mobile division from scratch (more on that in the coming chapters), which means that the firm is incurring some heavy losses.

Investing in new divisions, whether they are set up by Rakuten itself or through joint ventures, naturally requires significant upfront investments. Those investments will normally take years to amortize, which can be particularly troubling if you’re a publicly-traded entity like Rakuten.

An additional disadvantage may be a lack of focus. If, for example, Rakuten’s e-commerce competitors decide to ramp up their spending, then the firm likely has to follow suit. It may, however, not have sufficient funds as it already committed that budget to a variety of other departments that may require investment.

Interestingly, Rakuten’s ecosystem now extends beyond online as well. For instance, the company has inked various partnerships with supermarkets such as Seiyu, thus enabling customers to earn points at other (physical) locations.

Now that we’ve dissected Rakuten’s business model strategy, let’s take a closer look at how the company actually makes money.

How Does Rakuten Make Money?

As outlined in the previous chapters, Rakuten is able to make money from a diverse set of businesses that include almost every relevant market.

The Rakuten Group currently breaks down its revenue into three distinct segments, namely Internet Services , FinTech , and Mobile .

While I won’t go into detail about every single revenue stream that Rakuten has (we are both not ready for 20,000 words of content, trust me), I will nonetheless try to highlight the firm’s most significant ones.

So, without further ado, let’s take a closer look at each of Rakuten’s revenue streams.  

Internet Services

Internet Services represent Rakuten’s largest income source and, as the name suggests, are comprised of all of the firm’s internet-based offerings.

Rakuten Ichiba, its Japan-based e-commerce marketplace, drives most of that revenue. Over 56,000 merchants have so far set up shop on the platform and collectively facilitate daily sales of close to $100 million.

The majority of revenue that Rakuten derives from its marketplace comes in the form of commissions. Sellers, depending on the category, pay anywhere between 2 percent to 4 percent for every item sold.

Additionally, Rakuten charges registration and listing fees, payment processing fees, fixed monthly consultation fees, affiliates fees, system enhancement fees, and fees for users that earn points. The platform’s detailed fee structure can be accessed here .

Alternatively, sellers on the platform can promote their products, too. For example, they can purchase ad slots based on the queries that customers search for. Rakuten then makes money from every click that those ads attract.

The company offers a fulfillment service for its merchants (called Rakuten Super Logistics ), for which it obviously charges a fee, as well.

Rakuten Ichiba is certainly not the only e-commerce play that the company is pursuing. In October 2018, Rakuten and Japanese supermarket chain Seiyu announced a collaboration that culminated in the launch of Rakuten Seiyu Netsuper, an online grocery delivery service jointly operated by both companies.

The two firms generate revenue from that service just like any other supermarket: by selling items for more than they were initially purchased for, on top of associated costs such as storage or delivery.

Again, Rakuten has utilized its ecosystem play to boost adoption. Customers paying with the Rakuten Card can earn up to 1.5 percent in cashback rewards.

Furthermore, the collaboration informed the launch of Rakuten Zenkoku Super, a system for operating online supermarkets that entails order management and online payment systems, among others.

Other e-commerce units of Rakuten are Rakuten Fashion , Rakuten Books , Rakuten Rakuma (a C2C marketplace app where users can purchase unneeded items from other users), and Rakuten Bic (daily necessities sales service).

Yet another huge revenue driver for Rakuten is its travel offering. Much like Booking or Expedia, it allows travel operators to list their flights, trains, and accommodations on the platform. And again, it receives a commission for every sale, on top of offering banner and search advertising.

Interestingly, Rakuten has split up its travel business into distinct platforms instead of a single one. On Rakuten Travel Experiences , users can book tours and activities. Rakuten Stay solely lists vacation rentals while Rakuten CarShare enables customers to rent vehicles.

On the other side of the globe, American consumers know Rakuten as a cashback program where they can earn rewards for shopping at selected merchants. Here, Rakuten operates under an affiliate business model , meaning it receives a commission every time customers shop at one of its partners.

The third broad category within its Internet Services division is the various media businesses it operates.

We previously mentioned Rakuten Viki , which is one of the world’s most popular video-on-demand services. Much like Netflix, Viki generates income from subscription fees as well as advertising. Users can also simply watch movies on Rakuten TV . Other media assets are Rakuten Music and NBA Rakuten .

The last category could be defined as essential internet services. Users can purchase tickets to events ( Rakuten Ticket ), browse the internet ( Rakuten Infoseek ), search and post recipes ( Rakuten Recipe ), and even purchase and sell NFTs via Rakuten NFT .

Again, the group generates revenue through a variety of different means. NFTs sold via the online marketplace are subject to commission fees while the search engine monetizes queries via keyword-based advertising.

Since you’re a smart reader you’ve probably already guessed that the ecosystem approach comes into play once again. For example, when searching to purchase concert tickets on Infoseek, Rakuten is showing results of its own ticketing service on top.

A similar strategy has been adopted by search giant Google as well. When searching for queries like ‘flights’, Google regularly features its own flight comparison tool on top. Competitors would then need to invest in search ads, which allows Google to generate additional revenue and weaken its competition even further.

All of those internet services are supported by the firm’s financial division, meaning customers can utilize Rakuten-owned payment services to pay for the goods and services they order. So, let’s cover that division, shall we?

The Rakuten FinTech Group oversees the firm’s financial division. The group is acting as an ecosystem in and of itself as well as a key pillar of Rakuten’s overall ecosystem business model strategy.

Let’s first highlight what types of financial businesses Rakuten operates. The most relevant are:

• Rakuten Bank: a fully licensed and internet-based bank that offers consumers access to savings accounts and more
• Rakuten Card: a credit card issued by Rakuten Bank
• Rakuten Edy: a prepaid type of e-money that can be used at over 400,000 member stores
• Rakuten Insurance: offering general, life, and pet insurance
• Rakuten Pay: a digital payments app that enables users to make purchases online and in physical stores
• Rakuten Securities: an online brokerage that enables users to purchase and sell shares, ETFs, and other financial instruments
• Rakuten Wallet: a crypto asset exchange service that allows users to trade digital currencies like Bitcoin

As you might have guessed, those financial products fuel consumption across Rakuten’s various internet services. Every time members use the Rakuten Card, Edy, or Pay, they are eligible to earn cashback and other types of rewards.

This poses various advantages for Rakuten as well. First and foremost, Rakuten is saving costs with regard to payment processing. Conversely, the firm generates revenue from the interchange fees that its credit card yields (whenever a member uses the card to pay for goods and services).

It also gains access to the consumer’s spending patterns and financial situation – information it can use to recommend more tailored products.

Lastly, it also offers a vastly better user experience. Members can, for example, use their Rakuten Card (or even their points) to pay for stocks or ETFs they purchase on Rakuten Securities. No lengthy registration process is required hereby.

The ecosystem approach has enabled Rakuten Securities to become the leading service of its kind in Japan. Furthermore, Rakuten Bank is also the largest online bank in the nation.

Revenue is being generated through a variety of different means. Securities and Wallet derive the majority of their income from the trading fees that customers pay whenever they purchase or sell a financial asset.

Many of its payment products, such as the credit card or payment app, impose fees on merchants who accept those payments. The various insurance products simply collect monthly premiums. ATM or late fees are certainly part of the revenue mix as well.

And since Rakuten Bank is a fully licensed bank, it can use member funds and deposit them in interest-bearing bank accounts. Issuing loans is another possibility.

Interestingly, some of those businesses are operated abroad, too. While the Rakuten Card is available within the Americas, customers from Europe can open a bank account. However, the ecosystem benefits don’t really come into play here.

The last revenue generator is the corporate venture capital group Rakuten Capital . There, the firm either incubates new businesses or invests in promising startups.

According to Crunchbase , Rakuten has made over 70 venture investments thus far. One of its biggest wins became the ride-hailing platform Lyft . Rakuten had invested $700 million for a 13 percent stake, which netted the firm $2 billion when Lyft went public back in March 2019.

Although this investment has since turned a little sour, which led Hiroshi Mikitani to step down from Lyft’s board in September 2020, there were still plenty of winners. Rakuten makes money from the division whenever it sells the shares it initially purchases for a higher sum.

However, there are other key benefits, too. For once, it can potentially partner with the firms it invests in, thus creating additional demand for their products and services, which makes a positive return on investment much likelier.

Second, as an investor, it is entitled to sensitive data such as revenue, user numbers, profit metrics, and so forth. It can then utilize this data to inform its own product launches. For example, in Germany it is invested in simplesurance, a deal that certainly helped with the launch of its own insurance products.

While both internet services and FinTech remain core pillars of its revenue mix, there is one recently-launched business unit that might eventually trump them all. 

In April 2020, the company launched its long-anticipated low-cost data plan Rakuten Mobile . Priced at 2,980 yen (about $27) per month, the plan granted consumers access to unlimited calls and data where Rakuten has its own networks.

A mere 5 months later, it launched a 5G service for the same price as its existing 4G plan. Rakuten, in order to get that service off the ground, enlisted a heavy-hitter roster of vendors including Nokia Intel, Red Hat, Cisco, and dozens more.

They helped the company to implement what Rakuten deemed to be “the world’s first end-to-end fully virtualized, cloud-native mobile network. ”

From the radio access network (RAN) to the core, each component of the service could be operated using software instead of hardware that’s complex to upgrade. This also means that all of those components could be operated from the cloud.

Rakuten already had some prior experience in the industry as it ran a successful mobile virtual network operator (MVNO) business. However, its plans to become an end-to-end carrier are certainly more ambitious and costlier.

But why did it embark on that path? Because being a mobile operator can be an extremely profitable business that’s printing cash. Just ask the likes of NTT DoCoMo, KDDI, and SoftBank who were leading the charge in Japan for decades.

And what did all of them have in common? They were charging triple what Rakuten Mobile does. Rakuten was able to undercut them on price because its virtualized network is substantially cheaper to operate. Prime Minister Yoshihide Suga even attacked the operators for the prices they were imposing on customers.

Nevertheless, implementing your own network doesn’t come cheap. Rakuten said that it would take $5.4 billion to build its 4G network and another $1.8 billion to update to 5G.

Being a mobile operator can be extremely lucrative since customers tend to churn less frequently. And once again, the ecosystem approach comes into play here. Primarily, the mobile offering acts as yet another entry point to acquire new customers.

And those customers also seem to be more engaged. In one of its earnings releases , the company stated that Rakuten Mobile subscribers spend 35,831 yen (~ $260) more on Ichiba than non-subscribers.

Interestingly, Rakuten has also adopted one of Amazon’s key strategies, which is to turn cost centers into money makers. In August 2021, it announced the launch of Rakuten Symphony , a service through which it helps other telco companies to set up virtualized networks.

Going forward, Symphony will also introduce cloud storage, a digital app marketplace, customer relationship management tools, and much more. All of those products will then be sold as white-label offerings.

Right now, the unit continues to rack up heavy losses but is expected to amortize the initially invested capital over the next 5 years.

P.S.: since I didn’t know where else to put it. Rakuten also owns two sports teams, namely the football club Vissel Kobe and the baseball team Tohoku Rakuten Golden Eagles. And yes, the firm generates revenue from those clubs as well, for instance via ticket sales, transfer fees, TV rights, and merchandising.

Does Rakuten Sell Your Information?

No, Rakuten does not sell personally identifiable information despite the tropes of data it generates about its users.

The company does specify what type of data it collects within its help center . It includes personal information about you as a person (e.g., age or gender), location, search history, payment methods, connected accounts, referral history, and so forth.

Rakuten primarily utilizes this information to inform what products and services – whether that’s their own or third-party offerings – it recommends.

However, Rakuten may also sell aggregated sales and marketing data to other companies for a one-time fee.

For example, if a fashion brand thinks about designing a certain type of shoe, it may purchase sales data from Rakuten’s marketplace to see how often that product has been searched for or even bought, what the average price of said product is, and how the customer demographic looks like (e.g., gender split, where customers are based, etc.). 

Once again, that data would not include any information that makes customers identifiable to protect their privacy.

How Much Revenue Does Rakuten Generate?

Rakuten’s ecosystem approach has propelled the company into one of Japan’s leading digital platforms.

Moreover, it has also allowed its founder Hiroshi Mikitani to become one of Asia’s richest people as he continues to hold a double-digit percentage stake in Rakuten.

Below is an overview of how much revenue and profit (= net income) Rakuten has been able to derive over the past couple of years:

As you can see, Rakuten has incurred some heavy losses over the past few years. This is largely coming from the investments it made in its mobile division, namely in building up the network and acquiring companies in the space.

However, with over $60 billion in cash on hand, the company can certainly afford to pursue its loss-making strategy for a few more years.

Additionally, it plans to take some of its other business units, such as the securities division, public, thus adding even more cash to its rapidly depleting balance sheet. 

Viktor Hendelmann

Hi folks, Viktor checking in! Years of experience in various tech-related roles have led me to start this blog, which I hope provides you with as much enjoyment to read as I have writing the content.

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Last Updated on July 18, 2024 by Viktor Hendelmann

Something for everyone: Rakuten Mobile’s new plan starts from zero yen

Mobile users across Japan will soon have access to 5G cellular services at a lower price than ever before — potentially, even for free. During a press conference in Tokyo earlier today, Rakuten Mobile once again shocked the telecommunications industry with the announcement of “Rakuten UN-LIMIT VI,” a new and enhanced version of the Rakuten UN-LIMIT V mobile service plan that automatically scales down in price for customers who use less data.

The new service plan , which will come into effect from April 1, 2021, will cater to the diverse needs of customers — from light users who consume very little data, to heavy users who don’t want to have to worry about their monthly data use.

Rakuten Mobile is a new mobile company. There are a lot of hurdles ahead of us. But we’re challenging this status quo. We’re going to turn it upside down. Low-cost, fast and high-quality network coverage for every single person. That’s our goal. Mickey Mikitani, Rakuten CEO

“When we first launched the UN-LIMIT plan, we were targeting people who use a lot of data,” Rakuten CEO Mickey Mikitani explained to journalists at the conference. “That’s why we wanted to offer a simple package with unlimited data and calls for 2,980 yen. That was our goal.”

Free for light users, and still just 2,980 yen for unlimited data

On the new Rakuten UN-LIMIT VI plan, customers who use 1GB of data or less in any given month will pay exactly zero yen. If total monthly data usage is between 1GB and 3GB, the fee will be just 980 yen, while usage between 3GB and 20GB will cost 1,980 yen.

Customers whose data usage exceeds 20GB will continue to enjoy unlimited data for 2,980 yen per month. For customers with more than one Rakuten UN-LIMIT contract, total monthly data usage of 3GB or less will be charged at 980 yen.

After around nine months in business, it has become clear that heavy users aren’t the only customers looking for more reasonable rates. “Some 66% of mobile users in Japan actually use just 5GB or less per month,” he continued. “We’ve come to realize that there are actually a lot of users who barely use much data at all. And yet they’re stuck paying their carriers ludicrous mobile fees.”

You may have heard the term “digital divide” — what we’re doing is something more akin to an “anti-digital divide.” Whether you apply in-store or online, we’re offering one, fair plan for everyone.” Mickey Mikitani, Rakuten CEO

This is something the UN-LIMIT VI plan is looking to address. “To cater to all of these different users, we’re launching a single plan that works for every kind of user in Japan, whether they use a lot of data or not. This is Rakuten’s mission. It’s something we’re determined to do.”

Anyone applying for Rakuten Mobile service from today — as well as all current Rakuten UN-LIMIT customers — will be upgraded to Rakuten UN-LIMIT VI from April 1, 2021.

Right now we’re covering 73.5% of Japan’s population. This will be 80% by March, and 96% by summer this year. This was something we originally envisioned for 2026, so this is coming five years early. Mickey Mikitani, Rakuten CEO

As with previous Rakuten UN-LIMIT plans, customers can use unlimited high-speed data in the Rakuten network area, with a monthly 5GB of high-speed data in domestic roaming partner network areas and 2GB of high-speed data in the 66 countries and regions covered by the overseas roaming partner network areas. Domestic calls made through the Rakuten Link communication app will continue to be free of charge.

In response to other major carriers offering cheaper “online application only” plans, Mikitani passionately advocated for fair pricing for all customers. “To be completely honest with you, I don’t believe cheaper plans should only be available to internet-savvy customers,” he argued. “I think it’s wrong that less savvy users who have to go to physical stores are charged more. You may have heard the term ‘digital divide’ — what we’re doing is something more akin to an ‘anti-digital divide.’ Whether you apply in-store or online, we’re offering one, fair plan for everyone.”

Coverage for everyone, everywhere, from light to heavy users

The first year of Rakuten Mobile service will continue to be completely free for 3 million subscribers. As of the day of the event, Mikitani reported to journalists, there have been over 2.2 million applications for the service.

Network coverage is also expanding rapidly: “Right now we’re covering 73.5% of Japan’s population. This will be 80% by March, and 96% by summer this year,” Mikitani outlined. “This was something we originally envisioned for 2026, so this is coming five years early.”

For 2023, Rakuten Mobile has an even more ambitious coverage goal. “We will be launching a world-first system in which users can connect to the network directly from satellites,” Mikitani revealed. “What that means is that we will achieve a coverage rate — and I’m talking not just about population coverage, but geographical coverage — of 100%. Whether you’re in a remote corner of Japan where no-one lives, or on an uninhabited island, you’ll have Rakuten Mobile reception.”

By launching a plan that flexibly adjusts to give customers the best bang for their yen and eliminating the various fees associated with mobile services, Rakuten Mobile is continuing to make waves in the global telecommunications industry.

“The telecommunications industry has been stuck in the status quo, never able to launch a truly revolutionary service,” Mikitani reflected. “Rakuten Mobile is a new mobile company. There are a lot of hurdles ahead of us. But we’re challenging this status quo. We’re going to turn it upside down. Low-cost, fast and high-quality network coverage for every single person. That’s our goal.”

For more about the announcement, visit here .

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Rakuten Mobile Announces New "Rakuten SAIKYO (Strongest) Plan"

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 Rakuten Mobile unveiled its new service plan, "Rakuten SAIKYO Plan" (Rakuten Strongest Plan), that offers unlimited high-speed data usage in network areas across Japan. Thanks to a roaming agreement with KDDI, the population coverage will reach 99.9% from June 2023 and users can now use unlimited high-speed data in partner network areas with the same price. At the press conference announcing the plan, Rakuten Mobile Chairman Mickey, newly appointed Rakuten Mobile Co-CEO Wayoh (Kazuhiro) Suzuki and Rakuten Mobile CMO Naho Kono took to the stage to talk about the seven "strongest" points of the plan.

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All contributions made to a SEP are employer contributions.

Internal Revenue Code Sections 402(h) and 415 limit the amount of contributions made to an employee’s SEP-IRA to the lesser of dollar limitation for the year $66,000 for 2023 ($61,000 for 2022; $58,000 for 2021; $57,000 for 2020; $56,000 for 2019 and $55,000 for 2018) or 25% of the employee’s compensation. The  amount of compensation taken into account is also limited $330,000 for 2023 ($305,000 for 2022; $290,000 in 2021; $285,000 in 2020; $280,000 in 2019 and $275,000 in 2018). If your SEP plan document specifies lower contribution limits, then the lower limits control.

There are special rules if you're self-employed, such as a partner or an owner-employee. When calculating the deduction for contributions made to your own SEP-IRA, compensation is your net earnings from self-employment, which takes into account both the deduction for one-half of your self-employment tax and the deduction for contributions to your own SEP-IRA. For this reason, you determine the deduction for contributions to your own SEP-IRA indirectly by reducing the contribution rate called for in your plan. For more information on the deduction limitations for self-employed individuals, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) .

Employer contributions to a SEP-IRA won't affect the amount you can contribute to a Roth IRA or a traditional IRA. However, it may preclude you from receiving a tax deduction for contributions to a traditional IRA. See Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs) , for details.

How to find the mistake

Calculate 25% of each employee’s compensation limited to $330,000 in 2023 ($305,000 in 2022; $290,000 in 2021, $285,000 in 2020, $280,000 in 2019 and $275,000 in 2018) and compare the total contribution made for the employee to the lesser of that amount or the dollar limitation for that year $66,000 for 2023 ($61,000 for 2022; $58,000 for 2021, $57,000 for 2020, $56,000 for 2019 and $55,000 for 2018). Review the special calculations in Publication 560 for self-employed individuals.

How to fix the mistake

Corrective action.

There are two alternative methods to correct a failure to limit employer contributions to employees.

The amount in excess of the annual limit, adjusted for earnings through the date of correction, should be distributed from the affected employee’s SEP-IRA and returned to the employer. The distributed amount is not included in the income of the affected employee, but is reported on Form 1099-R with a taxable amount of zero. If it isn’t feasible to determine what the actual investment results would’ve been, you may use a reasonable rate of interest, such as the interest rate used by the Department of Labor’s  Voluntary Fiduciary Correction Program Online Calculator .

Alternatively, if a submission is made under the VCP program, the excess amount may be retained in the SEP-IRA, but only if the plan agrees to enter into a closing agreement and pay an additional amount to the IRS via an imposed sanction that is equal to at least 10% of the excess amount, excluding earnings. Note that the additional compliance fee will not apply if the excess amount is under $100. 

Under both correction methods, the plan sponsor is not entitled to a deduction for the excess contributions.

Employer I maintains a SEP plan. For the 2018 year, the contributions made for two employees, T and U, exceeded the limit in IRC Section 415. Employee T had an excess of $3,000 and U had an excess of $300. The failure is discovered in 2019.

Generally, Employer I would have to get employees T and U to take the excess money, adjusted for earnings, out of each SEP-IRA by taking distributions and returning the funds to the plan sponsor.

Correction programs available

Self-correction program.

The example illustrates an operational problem because the employer failed to follow the plan terms by improperly exceeding the 402(h) and 415 limitations provided for in the plan document and the Internal Revenue Code. If the other eligibility requirements of SCP are satisfied, Employer I might be able to use SCP to correct the mistake. Employer I would have to determine whether:

• Practices and procedures were originally in place to facilitate compliance with requirements regarding maximum contribution limits.
• The failure is insignificant . If the failure is significant then correction would have to occur by 12/21/21.

Voluntary Correction Program

Under VCP, correction is the same as described above under “Corrective action.” If the plan is not under audit, Employer I may make a VCP submission via the Pay.gov website following the procedures set forth in Revenue Procedure 2021-30 PDF , Section 11. Consider, using Form 14568, Model VCP Compliance Statement PDF , including Form 14568-C, Model VCP Compliance Statement - Schedule 3: SEPs and SARSEPs PDF . User fees for VCP submissions are generally based upon the current value of all IRAs that are associated with the SEP plan. For example, if the value is between $0 and $500,000, the user fee is $1,500 if the submission is made in 2019. User fees may change in subsequent years. If the value of all IRAs exceeds $500,000, the user fee will be higher.

If the mistake includes excess amounts contributed to the employees' IRAs associated with the SEP, the employer must use VCP if the employer wishes to allow the excess amounts to remain in the affected participants’ IRAs. If this correction method is used, a special additional payment of at least 10% of the excess amount will apply. This is in addition to the VCP submission user fee.

Audit Closing Agreement Program

Under Audit CAP, correction is the same as described above under “Corrective action.” Employer I and the IRS enter into a Closing Agreement outlining the corrective action and negotiate a sanction that is not excessive, considers facts and circumstances, and bears a reasonable relationship to the nature, extent and severity of the failures, based upon all relevant factors described in section 14 of Rev. Proc. 2021-30 .

How to avoid the mistake

After the initial calculation of allocations based on the terms of the SEP plan document, you should check to make sure none of the proposed allocations would violate Internal Revenue Code Sections 402(h) and 415. If there’s a problem, you can adjust it before you transfer the money into the SEP-IRAs.

SEP Fix-it Guide SEP overview EPCRS overview SEP checklist PDF IRA-based plans additional resources

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Rakuten Slides Most Since May on Fintech Reorganization Delay

By Takahiko Hyuga

Rakuten Group Inc. ’s shares slid as much as 6.7% in their biggest intraday drop since May on delays to the Tokyo-based online shopping mall operator’s plans to combine its fintech operations.

A plan to reorganize Rakuten’s banking, securities, credit card and insurance businesses under one umbrella had fueled optimism around the debt-ridden company, which for years has been trying to turn around its loss-churning wireless business.

But such a move would not take place until January, instead of a previous goal of October this year, the company said, citing regulatory issues and consideration of Rakuten Bank minority shareholder ...

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Rakuten slides most since May on fintech reorganisation delay

• A plan to reorganise Rakuten’s banking, securities, credit card and insurance businesses under one umbrella had fueled optimism around the debt-ridden company. PHOTO: BLOOMBERG

RAKUTEN Group’s shares slid as much as 6.7 per cent in their biggest intraday drop since May on delays to the Tokyo-based online shopping mall operator’s plans to combine its fintech operations.

A plan to reorganise Rakuten’s banking, securities, credit card and insurance businesses under one umbrella had fueled optimism around the debt-ridden company, which for years has been trying to turn around its loss-churning wireless business.

But such a move would not take place until January, instead of a previous goal of October this year, the company said, citing regulatory issues and consideration of Rakuten Bank minority shareholder interests. Shares of Rakuten Bank fell as much as 6.9 per cent.

Billionaire Hiroshi Mikitani’s company faces about 500 billion yen (S$4.4 billion) worth of corporate bond redemptions through 2025. Concern is growing that the company may miss an opportunity to cash in on the integration of its fintech arms before that deadline.

Rakuten Bank president Hiroyuki Nagai earlier told Bloomberg News that the bank would protect the interests of its minority shareholders, even if that meant not going through with the group’s fintech restructuring plans.

The parent company, which has posted losses for five straight fiscal years, last year sold down its stake in newly-listed Rakuten Bank to raise funds to shore up finances depleted from an ill-timed foray into the country’s saturated mobile carrier sector. BLOOMBERG

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