Hiroshi Mikitani discusses Rakuten Mobile’s new “strongest infinite” rate plan and partnership with KDDI in Q&A session

On the 12th, Rakuten Mobile announced the “Rakuten strongest plan” as a new rate plan. At the press conference held on the same day, Hiroshi Mikitani, the chairman of the company, took the stage.

This article focuses on what Mr. Mikitani said during the Q&A session.

Review the contents of the presentation

The concept of the “Rakuten strongest plan” announced as a new rate plan is “the strongest infinite”. Until now, in partner areas using KDDI (au) lines, in the case of Japan, the speed limit was applied after exceeding 5 GB. This restriction is abolished in the “Rakuten Strongest Plan”.

The price is the same as the previous price plan “Rakuten UN-LIMIT VII”, up to 3278 yen. Available starting June 1st. A desktop version of “Rakuten Link” will also be released in August.

Question-and-answer session

――I think the biggest change in plan content this time is the abolition of the capacity limit in the partner line area. Partner lines are basically borrowed, so I think that the more users use their data, the more they will pay to KDDI. I would like to know if the unit price that can be rented has decreased, or if the volume flowing through the company’s line has increased, so it can be covered.

Mr. Mikitani
I can’t talk about everything because we have a confidentiality agreement, but one thing is that Rakuten has been working hard on its own line. I believe that KDDI made the wise decision that it would be beneficial for both parties if the contract was economically rational and the contract period was slightly extended.

I can’t give you the details, but I think it’s safe to assume that there is basically no additional financial burden due to this plan.

In this business alliance, we will also use the platinum band in the Tokyo, Nagoya, Osaka area, which is centered on the so-called downtown area. Also, there was no problem when I switched from Rakuten to a partner line, but when I returned, there was a slight lag, which was resolved through technical cooperation. I think there is a possibility that we can develop various things in the future.

――Is there any plan to delay the construction of Rakuten Mobile’s own network due to this business alliance?

Mr. Mikitani
As President Takahashi (of KDDI) has said, 5G and other technologies will come out in the future, and we will use our own lines to some extent, but not everything will be done on our own lines, and networks are networks, so it will be seamless. It is changing to the idea that it doesn’t matter which one.

With Rakuten Mobile making new contracts cyclical, we believe that it is no longer necessary to build only one’s own network as soon as possible.

We will continue to work on what we are already doing, but in the end (the population coverage rate) has reached 99.9%, so we don’t have to rush too much… Somehow the financial report is announced. It’s starting to look like a meeting (laughs), but that’s how I think about it.

――I would like to know more about this price plan and the reason why the price was deferred. I think that not only investors but also users are concerned about costs. I would like to know whether I can continue to use Rakuten Mobile’s services from now on, so that I can use them with peace of mind.

Mr. Mikitani
I think that if everyone is willing to join (join), they will be able to continue (laughs). It’s a bit of a joke, but there’s one thing that we’ve been able to do with new technology that is overwhelmingly reducing costs.

The store is also substantial, but there is one thing that most people join online. And because our operating costs are technically different from those of other companies, such as virtualization technology, we believe that if we have a certain number of subscribers, we will be able to operate in a sound financial position.

As data volumes continue to increase, ARPU (Average Revenue Per User) is also rising, approaching the upper limit of 2,980 yen (editor’s note: 3,278 yen including tax). The additional profit from Rakuten Group’s services is also quite large.

For a company with an ecosystem as powerful as Rakuten’s ecosystem to enter the mobile industry, we must look at the contribution to the earnings of the entire group as well as the profits of the mobile business itself.

Just as Amazon is making big profits from cloud services, (Rakuten Mobile’s communication plan) is also a showcase for external sales of software technology. I think it would be good if you could think of it as a price setting that comprehensively judges these three factors: decent earnings on a stand-alone basis, contribution to the ecosystem, and external sales of software.

――What do you think about the quality of Rakuten Mobile?

Mr. Mikitani
When it comes to quality, I think there are basically three. One is the coverage, the other is the speed, and then the simple quality of the communication…that’s the quality of the calls and things like that.

As for the latter two, we are using very new technology and there are some parts that are superior to other companies, and I think that the racing part has almost disappeared.

However, Japanese people care about coverage, so that was a big point. Also, to be very honest, there was an extremely congested area, so how to solve it. There were two issues. In that respect, I think this new roaming contract has been a great plus.

The major issue with 70% was this coverage, and I think it will be mostly resolved this time.

――What is the break-even point number of subscribers?

Mr. Mikitani
What we are aiming for is a new technology that can build a healthy mobile network, not just for the Japanese market. One of our goals is to become the core of the world’s mobile network.

In that sense, it is the same in Germany, Canada, and the United States, and I think we are achieving considerable success in Southeast Asia. I will refrain from mentioning the break-even point as it will depend on future cost reductions, but for our services, we are about to enter Phase 2 from Phase 1 as a launch pad.

The biggest point of Phase 2 is to reach breakeven point quickly, and we are making good progress on that.

――Please tell us more about the roaming contract with KDDI, the background, etc.

Mr. Mikitani
I’d like to say one more thing, but I can’t because of confidentiality (laughs).

As for the background, I don’t think this kind of deal should be discussed in a gentleman’s agreement, and I think there are various circumstances between both companies.

However, in terms of a large industry trend, there is a trend overseas to share facilities to some extent. This means that even large telecom companies will be able to accommodate each other.

In the sense of universal service, it is important to be able to use 4G and 5G wherever you go, but it is inefficient to have four mobile antennas standing in a place where the population density is not very high. target.

In the end, this will be reflected in the price, so even within the mobile industry, it is said that this shift of “cooperation and competition” is about to occur, in which the competing and cooperating parts are considered from a different perspective than before. matter. I believe that our partner companies are also seeing this with foresight.

Costs will be incurred in various ways, such as investment in 5G, withdrawal from 3G, and the elimination of equipment from some Chinese manufacturers. In the sense of providing a better network at a lower cost, cooperation will become more important than competition.

To be honest, if Rakuten Mobile hadn’t entered the mobile industry, I think mobile phone bills would probably have risen by 10% to 20%.

(As a company story) Rakuten Mobile also contributes greatly to the Rakuten ecosystem. Ultimately, (Rakuten Mobile) aims to be number one, and in that process, I believe it will make a significant contribution to the Group.