Rakuten Mobile hits break-even but growth is still slow

• Rakuten Mobile is still Japan’s telco minnow, with about 7.5 million retail subscribers
• But its numbers are heading in the right direction and it has just hit break-even, according to its parent company
• Rakuten Symphony, the mobile operator’s vendor offshoot, struck a positive note with a 62% rise in annual revenues

The mobile journey of Japanese digital conglomerate Rakuten Group continues to be a fascinating one, as its Rakuten Mobile operation battles for financial stability and for slivers of market share as it competes against a trio of telco giants in Japan. Meanwhile, the mobile operator’s vendor offshoot, Rakuten Symphony, is plying its trade across the world and has just reported its best ever quarter of revenues. 

Let’s start with Rakuten Mobile, which has just hit a financial milestone: December was its first month of earnings before interest, taxes, depreciation and amortisation (EBITDA) profitability – 2.3bn yen ($15m) – though that obviously wasn’t enough to save it from another year of significant losses. 

For the full year 2024, Rakuten Mobile reported revenues of 283.9bn yen ($1.86bn), up by 26.2% compared with 2023’s numbers. Its operating loss was 216.3bn yen ($1.42bn), which was about 28% better than in 2023, while its EBITDA loss for the year stood at 53.8bn ($353m), a year-on-year improvement of about 65%. So the financials are still challenging but improving.   

Rakuten Group expects its mobile operator to achieve full year EBITDA profitability in 2025. 

Rakuten Mobile ended 2024 with 8.3 million customers in total, though this number includes mobile virtual network operator/enabler customers: Strip those out and Rakuten Mobile ended last year with 7.46 million mobile service customers, up from 5.9 million at the end of 2023. 

To put this into perspective in the Japanese market, the sector leader, NTT Docomo, ended last year with almost 91 million mobile customers, KDDI had almost 33 million and SoftBank had more than 31 million.

So what’s next for Rakuten Mobile? As well as generally seeking to boost its user base, it recently launched a generative AI service for business customers as it seeks to engage more with the enterprise community. And, of course, the operator will seek ways to contain its operating costs, for example by using its smart network management tools to improve energy efficiency.

But after several years of lower investments in its network, Rakuten Mobile’s capex budget is set to ramp up this year. In 2024, the operator spent 81bn yen ($530m) on capex, down from 168bn yen ($1bn) in 2023, but capex in 2025 is expected to rise to 150bn yen ($982m). 

Rakuten Mobile’s vendor sister company Symphony, meanwhile, ended the year with a bang, according to the parent company’s investor slides, which suggest Symphony reported its highest ever quarter of revenues, in the region of $300m, almost double the same period a year earlier. Rakuten Group noted, though, that the sales increased due to bookable “deliveries to major customers” – with its main customers being Rakuten Mobile and German 5G greenfield operator 1&1 – and that “revenue trends fluctuate due to factors such as timing of deliveries to clients”, which suggests that revenues are likely to dip again in the coming quarters.  

When reported in Japanese currency, Symphony’s full year revenues came in at 85bn yen ($557.2m), up by 62% from 2023. 

Symphony continues to gain market traction for its portfolio of technology products, which includes Open RAN systems. It is just about to start Open RAN trials in Ukraine with Kyivstar, and last month the vendor announced plans to test 4G and 5G Open RAN technology in Africa with Telkom Kenya.

- Ray Le Maistre, Editorial Director, TelecomTV