The bills are piling up for Rakuten's mobile misadventure

Sep 12 (Nikkei) - A decade ago, the realization that mobile telecommunications networks are a capital-intensive, low-margin, mature, congested and sticky business led SoftBank Group's Masayoshi Son to shift direction and embark on an ambitious, though now foundering, global investment spree in startup e-commerce platforms with limited hard assets, such as WeWork.

In ironic symmetry, realizing that competing with e-commerce behemoth Amazon.com on its home turf in Japan, much less globally, was failing, Rakuten's Hiroshi Mikitani shifted strategy two years ago, making a massive investment to launch Japan's fourth mobile telecommunications carrier in head-to-head competition with incumbents NTT Docomo, KDDI and SoftBank.

Son's pivot away from the bruising world of building and managing successive new generations of transponders and fiber optic networks, the physical pipelines that carry electronic content, should have given Mikitani reason to pause.

In particular, SoftBank's struggles as the perennial No. 3 in Japan behind NTT Docomo and KDDI, and the ugly losses incurred with the acquisition of U.S. No. 3 Sprint in the face of its uphill battle to compete against the duopoly of AT&T and Verizon, should have been a clear warning that the mobile market is unkind to newcomers and small fry. ...continue reading

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