Rakuten Mobile is bleeding users after dropping free data plan

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Image by Sergei Elagin | Bigstockphoto

CommsUpdate: Rakuten Mobile’s recent announcement that it is stopping its ‘zero-yen plan for light users’, which is free of fees if the subscriber’s monthly data usage stays below 1GB, has reportedly prompted an outflow of customers to its rivals.

Local press reports note that KDDI (au) has seen a deluge in applications for its low-cost ‘povo’ plan, while SoftBank has unveiled its own initiative that will essentially mirror Rakuten’s old offer by making monthly fees effectively free for some users.

Whilst Rakuten’s zero-yen plan proved very popular and allowed it to increase its subscriptions, it also saddled the operator with heavy losses, prompting the decision to drop the offer just over a year after it was launched.

Instead, starting 1 July, the new fourth operator will charge a minimum JPY1,078 ($8.40) per month, even for the lowest data users – although in a bid to staunch subscriber losses, Rakuten Mobile is apparently including a ‘special points’ bonus to keep charges at close to nothing. Even so, one official at Rakuten Mobile is cited as saying it ‘has seen subscribers with 1GB or lower plans discontinue their contracts’.

Last week, Rakuten Mobile reported that the total number of subscriptions for the MNO and MVNO services surpassed 5.68 million as of the end of Q1 2022 as mobile segment revenues surged 44% year-on-year to JPY80.4 billion ($622 million).

However, it also recorded losses of JPY135 billion in the January-March quarter largely due to its ongoing network deployment costs.

“Mobile segment profitability is expected to improve as planned from Q2 2022 onwards,” the company noted.

Rakuten Mobile CTO Tareq Amin confirmed that the operator aims to accelerate 5G deployments across Japan, having recently hit the target of covering 97% of the population with its 4G LTE network by end-March 2022.

Rakuten Mobile  had deployed more than 44,000 4G base stations by April, he said, while indoor coverage has also expanded, as the number of compact antennas for indoor use nationwide reached 40,000 units as of 31 March 2022.

Amin also revealed Rakuten Mobile plans to launch a fixed wireless access (FWA) service in December using both sub-6GHz and mmWave spectrum, provided that it can secure the relevant CPE devices in time.

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