Jiji Press TOKYO (Jiji Press) — Major mobile phone carrier KDDI Corp. said Thursday that it has tied up with Rakuten Inc. and will help the cybermall operator enter into the domestic mobile communications market as a new carrier.
Under the alliance, KDDI, the operator of the “au” mobile services, will lease its network to Rakuten so the firm can provide customers throughout Japan with fourth-generation Long-Term Evolution, or 4G-LTE, high-speed connection services when it starts its mobile phone business in October 2019.
The two firms will also deepen their partnership in logistics and payment service areas.
KDDI President Makoto Takahashi said at a press conference that “now is a time in which we need huge capital investment costs” for 5G telecommunications and the Internet of Things.
On his reason to join hands with a future industry rival, Takahashi noted the importance of cooperating in utilizing each other’s resources.
Rakuten has been operating a budget smartphone business under a network lease contract with NTT Docomo Inc.
Rakuten, however, announced last year it will become Japan’s fourth major mobile phone carrier with own base stations and other communications facilities.
In April this year, the communications ministry allocated a frequency band for the company.
While the firm had said it will spend up to ¥600 billion for preparations, including setting up base stations and concluding roaming deals with the existing leading carriers, its business partner remained undecided.
Rakuten plans to speed up construction of base stations in Tokyo’s 23 wards, Osaka and Nagoya. It will use KDDI’s communication lines for other areas.
KDDI’s roaming agreement with Rakuten will be valid until the end of March 2026. Rakuten aims to finish setting up its own network by then.
Meanwhile, KDDI, which is beefing up its non-core businesses, such as payment services and online shopping, will capitalize on Rakuten’s logistics infrastructure to streamline its distribution and delivery operations.