Rakuten posted its 15th straight quarter in the red on Tuesday, as losses at its mobile service network unit exceeded the record performance of its financial unit.
The internet conglomerate posted an operating loss of ¥33.3 billion ($213 million) in January and March, in line with estimates. The result was about half the loss in the same quarter a year earlier, but little changed from the previous quarter.
The financial unit, which offers online banking, brokerage, credit card and insurance services, posted operating profit of ¥39.3 billion, up 47% from a year earlier, as its customer base grew.
But the mobile sector, which has struggled with huge buildout costs and lackluster subscriber growth since its launch in 2020, posted an operating loss of ¥71.9 billion.
While the number of mobile subscribers rose to 6.48 million at the end of March – an increase of around 1.5 million since the end of August last year – average revenue per user (ARPU) rose only fractionally.
Rakuten has offered generous joining bonuses to new customers, who get further discounts and benefits on the other services in Rakuten’s ecosystem, growing its subscriber base but limiting unit profits.
The mobile network buildout has resulted in massive debt, and Rakuten has ¥627 billion ($4 billion) in outstanding bonds due by the end of 2025, according to LSEG data.
However, Chief Financial Officer Kenji Hirose told a briefing that he was confident in Rakuten’s ability to refinance upcoming debt payments.
In January, Rakuten refinanced about $1.75 billion of its U.S. dollar-denominated debt at an interest rate of 11.25%, due in 2027. The new fundraising helped Rakuten redeem two tranches of bonds with interest rates of 10.25% and 3.546%. respectively.
