The Tokyo-based company announced that it would provide its low-cost virtual 5G telecoms technology to German wireless carrier 1&1. Rakuten will receive between $2.29 billion and $2.74 billion over the next 10 years through the deal, reported Nikkei Asia.
Shares of Rakuten jumped about 8% to 1,358 yen ($12.4) on Thursday. Mikitani’s fortune now stands at $7.7 billion on the Real-Time Billionaires List, making him the sixth-richest person in Japan.
In 2019, Mikitani invested $5.5 billion to launch a new telecom network and disrupt Japan’s three-way mobile phone oligopoly: KKDI, NTT Docomo and Japanese billionaire Masayoshi Son’s SoftBank by providing a cheaper and more flexible network called radio access network (RAN).
Contrary to traditional networks, which are often provided overall by one network supplier, RAN’s network functions are in the cloud and are run by software. RAN can slash operating and maintenance costs by at least 30% and can provide operators with the flexibility to work with different manufacturers, since it is free from hardware-vendor lock-in.
Rakuten launched its RAN mobile network in April 2020 in Japan, and now this technology will help 1&1 become the fourth-largest carrier in Germany, according to the announcement, after Deutsche Telekom, Vodafone and Telefónica’s O2.
Speaking to Forbes Asia two years ago, Mikitani stated Rakuten planned to leverage the 100 million customers in Japan already using Rakuten’s e-commerce, credit cards, internet banking, online trading and content to also use its mobile service. Rakuten wanted to build a new telecom network in Japan in as little as half the time and at a cost of up to 40% less than what it would take to build a conventional system.
“Our operation is much leaner than our competitors, and we can enrich the service using the existing Rakuten ecosystem,” he told Forbes Asia in 2019. “And I don’t think people really care whether it’s NTT, SoftBank or Rakuten that much. It’s primarily about connectivity, speed, price and what kind of extra services we can provide.”
Rakuten also announced on Thursday the acquisition of U.S.-based mobile technology company, Altiostar Networks, which operates RAN networks. Their partnership aims to “accelerate deployment of software-centric, virtualized services for the mobile industry across the globe,” Rakuten said in a separate announcement.
“We’re entering a new era where mobile network operators can choose how to build and deploy a network by working with the world’s most innovative software companies to create open and interoperable solutions,” Mikitani said in a statement.
Earlier in March, Rakuten raised $2.2 billion by issuing new shares to Japan Post, Walmart and Tencent to fund the roll out of its mobile carrier business.