Rakuten's Mikitani bets $5.5 billion to shake up the telecom industry
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Mikitani plans to leverage the 100 million customers in Japan already using Rakuten’s e-commerce, credit cards, internet banking, online trading and content to also sign up for the mobile service, which will start initially in October in major Japanese cities and then expand nationwide. “Using our ecosystem, we can acquire customers at a relatively lower cost,” Mikitani says. “Our operation is much leaner than our competitors, and we can enrich the service using the existing Rakuten ecosystem.
To be sure, no telecom company has attempted what Rakuten is planning, to build from scratch the world’s first end-to-end cloud-based vRAN network. Rakuten acknowledged the challenge in a presentation in February: “They said it would be impossible…we dared to make the impossible, possible.” In February, Rakuten said it wanted to take a “strategic investment” in one of its main partners to build the network, U.S. telecom software firm Altiostar Networks, for an undisclosed sum .
Apart from competing with Amazon, Rakuten will have to contend with Japan’s entrenched and well-funded incumbent carriers. NTT Docomo accounts for a lion’s share at 38% of the subscriber market of 178 million, KDDI has 28%, while SoftBank has 23%, with the rest being circuits leased from the three carriers used for discount mobile services, including those operated by the incumbents.
At the buttoned-down IBJ, he became the first person in his cohort to earn a company scholarship in 1991 for an MBA. However, the 1995 earthquake, which wrecked his hometown of Kobe and killed over 6,000 people, including an aunt, an uncle and friends, prompted him to think hard about the Buddhist term mujo or the “transiency” of life, according to Mikitani’s 2009 book Principles for Success.
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