Rakuten shares rise as mobile losses shrink

Rakuten shares rise as mobile losses shrink

Rakuten Group Reports Narrowing Losses, Shares Surge

Rakuten Group

Rakuten Group, the Japanese e-commerce giant, experienced a significant surge in its shares on Monday morning. The company reported narrowing losses at its mobile unit, which had been draining its finances. This positive news, combined with reassurances about its ability to cover debt burdens in the coming year, led to a 5.2% jump in shares.

The April-June period marked the 12th consecutive quarter of losses for Rakuten, largely due to the high costs associated with building out its mobile network. However, the company’s recent efforts to cut costs have started to yield positive results. Analysts at Jefferies noted that Rakuten’s roaming agreement with KDDI, one of Japan’s incumbent networks, played a crucial role in enabling cost improvements within the company.

In addition to cost-cutting measures, Rakuten has also been strategically listing its successful business units to generate cash. It listed Rakuten Bank, its internet banking business, in April and applied to list its securities business in July. Last week, the company announced plans to consolidate its payments and points businesses, integrating them into Rakuten Card, its credit card and loans unit. There is even potential for this business to be listed in the future.

To further alleviate its debt burden, Rakuten has committed to not taking on any additional gross debt. Instead, it plans to use equity-related financing to reduce current debts. The group currently has a total debt of 1.9 trillion yen ($13.11 billion), with significant sums due in 2024 and 2025.

Rakuten’s positive financial news has bolstered investor confidence, leading to the surge in shares. While the company has faced challenges in the past, its efforts to cut costs and strategically list successful units demonstrate its determination to improve its financial standing. By narrowing its losses and finding ways to generate cash, Rakuten is positioning itself for a more sustainable and prosperous future.

($1 = 144.9500 yen)