comscore Cell phone firm pushes growth, foregoes profits | Honolulu Star-Advertiser
News

Cell phone firm pushes growth, foregoes profits

TOKYO >> Rakuten Inc. entered the mobile phone business three months ago with a bullish strategy, enduring hits to its bottom line in the name of growth. The company acquired 1 million mobile phone line applications in June but has yet to turn a profit.

Advance investments, including construction of base stations, have piled up, costing the company 35.3 billion yen ($329 million). Rakuten is aiming for 3 million customers by the end of the year, but CEO Hiroshi Mikitani has said the break-even point is 7 million, meaning it will take some time for the company to reach profitability.

Rakuten is running a promotion that provides its first 3 million customers with free communications for one year, and has launched other deals, such as offering its Rakuten Mini phone, which usually goes for 17,000 yen ($158.50), for just 1 yen.

The biggest selling point of Rakuten’s cell service, however, is its low monthly charge of 2,980 yen ($27.80). But mobile phone giants SoftBank Corp. and KDDI Corp. are introducing their own budget brands, dubbed “Rakuten killers” in the industry, at a similar price point.

But Rakuten was beset with challenges beyond market competition.

In June, changes made to the Rakuten Mini that potentially compromise phone reception could be a violation of Japanese law, and the company could face discipline.

In addition, the pandemic has hindered its progress in testing its communication network. This is expected to result in a three-month delay in introducing 5G high-speed, high-capacity communication.

Click here to see our full coverage of the coronavirus outbreak. Submit your coronavirus news tip.

Be the first to know
Get web push notifications from Star-Advertiser when the next breaking story happens — it's FREE! You just need a supported web browser.
Subscribe for this feature
Comments (0)

By participating in online discussions you acknowledge that you have agreed to the Terms of Service. An insightful discussion of ideas and viewpoints is encouraged, but comments must be civil and in good taste, with no personal attacks. If your comments are inappropriate, you may be banned from posting. Report comments if you believe they do not follow our guidelines.

Having trouble with comments? Learn more here.

Scroll Up