Chip shortage stymies Rakuten’s Japan mobile coverage

Japanese e-commerce company Rakuten Group has again pushed back a coverage target for its bid to disrupt the country’s wireless communications market, with a global chip shortage slowing progress on building its network.

Rakuten Mobile now expects to need until March for its 4G network to cover 96% of the population in its service area, the company said in a briefing Friday. It had first aimed for the summer of 2021, then for sometime this year.

This marks the latest setback for billionaire Rakuten CEO Hiroshi Mikitani’s push into wireless with an ambitious plan to build a network without costly specialized hardware, using software to bridge the gap.

Rakuten Mobile’s 4G had 94.3% coverage as of Oct. 14.

The company’s woes stem largely from delays in installing base stations. Rakuten Mobile plans to build a network of 44,000 4G base stations. It hit the 30,000 mark in September, but tight supplies of semiconductor devices have stymied progress on about 10,000 locations.

Rakuten Mobile has offered roaming through rival KDDI’s network. It began accelerating the switch to its own network in October, aiming to reduce fees paid to KDDI.

Rakuten Group reported a 65.4 billion yen ($574 million) net loss for the January-June half. Cutting back on roaming “is an extremely big milestone toward turning a profit,” Executive Vice President Shunsuke Yazawa said Friday.

Yazawa also outlined plans to accelerate customer acquisition through such means as setting up more retail locations.

Rakuten Mobile has no allocations of spectrum in the so-called platinum band, meaning that it tends to have spottier reception indoors and below ground than top three players NTT Docomo, KDDI and SoftBank. The company is installing small devices at restaurants and retailers to improve indoor reception and aims to have more than 30,000 in place by year-end.

Rakuten sees exporting its wireless network technology as a business opportunity.

“Amazon started off in e-commerce, but now Amazon Web Services has become a key source of its earnings,” Mikitani has said. “We want to create an ecosystem in the mobile business and turn that ecosystem into a profit generator.” Nikkei Asia