Rakuten soars after winning contract for next-generation network

Rakuten Group Inc., the Japanese e-commerce giant that launched its own mobile service last year, gained the most in over three months after the company announced that it won its first contract to export its network-building know-how overseas.

Shares climbed as much as 8.4% to ¥1,358 ($12) in Tokyo on Thursday, the biggest intra-day gain since April 22. Rakuten said it signed a 10-year contract to build, run and maintain a fully-virtualized network for Germany’s 1&1 AG. While the company declined to disclose the value of the deal, the Nikkei newspaper reported its worth at over ¥250 billion ($2.3 billion).

The Japanese e-commerce behemoth shook up the domestic wireless market when it launched its network in April 2020, taking on incumbents KDDI Corp., SoftBank Corp. and NTT Docomo Inc. with cheaper and more flexible service offerings. Rakuten said it is the first mobile carrier in the world to build a service using next-generation radio access network architecture that allows for more extensive use of the cloud and frees the operator from hardware-vendor lock-in.

“We are definitely a front-runner in this field and I think we have a couple of years head start advantage,” Rakuten Chief Executive Officer Hiroshi Mikitani said in an interview with Bloomberg Television. “Addressable market will be somewhere between $100 billion to $150 billion in two to three years.”

Rakuten also announced that it created Rakuten Symphony, a unit that will offer network solutions to mobile carriers, and said it has already held discussions with dozens of clients around the world. Separately, the Japanese company said it acquired the remaining shares of Altiostar Networks Inc., making the U.S.-based telecom software developer a fully-owned subsidiary.

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