Japan’s technology company Rakuten revealed on Thursday that it will partner with local telecom KDDI to seriously enter the mobile business where it will compete with NTT Docomo and SoftBank Group. KDDI will provide the company with access to its national roaming services, while Rakuten will offer its expertise in mobile payments.
The Japanese government supported the Rakuten’s planned entry into the mobile services market last year, saying that increased competition would be beneficial to consumers.
However, analysts are skeptical about the deal, doubting that Rakuten is capable of building a large enough network to offer reliable and high-speed services.
The deal takes place against the backdrop of strong government pressure on national telecoms to cut prices for services, which negatively affects consumers.
The shares of NTT Docomo fell nearly 15% on Thursday after the company said lower fees would harm the profits of the next fiscal year.
SoftBank’s stock, which plans to launch its initial public offering (IPO) of its mobile business in early December, also fell by more than 8%.