Rakuten Mobile expects up to $2B from network sale and leaseback

Rakuten Mobile has struck a deal with a group of infrastructure funds for the sale and leaseback of parts of its mobile network. Rakuten Group said in a statement Thursday it expected to raise 150 billion to 300 billion Japanese yen (US$1.0 billion to $2.1 billion) from the arrangement, which is yet to be finalized.

Funds raised from the sale will be used for working capital and mobile capex, it said.

The investor consortium is led by Macquarie Asset Management and includes the British Columbia Investment Management Corporation, the company said. Rakuten isn't disclosing which assets are to be transferred, but a spokesperson said in an email that the partnership with "a world-leading partner like Macquarie" was a sign of confidence in the company.

Judging by the sale and leaseback deals across Asia in the past four years, the deal will almost certainly involve Rakuten's passive network assets such as mobile towers. It's become a favorite tool for Asia-Pacific telcos, enabling them to monetize their fixed assets and raise some cash without sacrificing network quality.

Mired in the red

NTT DoCoMO, PLDT, Globe Telecom and XL Axiata, as well as all of the Australian and New Zealand telcos have disposed of some or most of their cell towers in sale and leaseback arrangements since 2020.

Rakuten, which reports its Q2 result Friday, has staunched much of the bleeding from its four-year foray into mobile, but the business remains mired in the red.

It narrowed its loss to JPY71.9 billion ($490 million) in Q1, down from JPY102.7 billion ($696 million) a year earlier. The parent company disclosed a deficit of JPY35.8 billion ($243 million), less than half the JPY82.6 billion ($560 million) loss a year earlier.

The company reported 6.5 million customers at the end of Q1 and plans to boost 5G network coverage by around 60% to 70% in the Tokyo and Osaka regions this calendar year. It said Thursday its capex this financial year is likely to remain at around JPY100 billion ($678 million) as previously forecast.

Rakuten chief Mickey Mikitani said the agreement showed that Macquarie and other investors "strongly believe in our vision for the future, and together, we've made our financial foundation even stronger."