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Rakuten Deal Exposes Nokia to a $5.4 Billion Opportunity

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Rakuten is building its own mobile network

Nokia (NOK) secured a deal to build Rakuten’s new mobile network in Japan. Rakuten is Japan’s equivalent of Amazon in the United States. It serves more than 1.2 billion customers around the world, including more than 100 million customers in home country Japan.

Rakuten has been providing mobile services on rented networks just as Comcast (CMCSA) and Charter Communications (CHTR) have done in the United States through their partnerships with Verizon (VZ). Now Rakuten wants to build its own network and it tapped Nokia to help with the project. Rakuten is planning to invest as much as 600 billion yen ($5.4 billion) on its mobile network buildout, according to a report from the Nikkei Asian Review.

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Nokia previously ran 5G network tests with Rakuten

Before securing the deal to build Rakuten’s new mobile network, Nokia had partnered with the operator on 5G network trials. Japan is one of the economies expected to be early adopters of 5G network technology, which promises ultrafast connection speeds over wireless networks. Besides Nokia, Ericsson (ERIC) is the other major telecom equipment vendor hunting for 5G business opportunities in Japan. Ericsson has carried out 5G network trials with SoftBank (SFTBF), one of the leading mobile operators in Japan. SoftBank is the parent of Sprint (S), the American operator that is seeking to merge with its rival T-Mobile (TMUS) in a deal valued at more than $26 billion.

Nokia generated $7.8 billion in revenue in the fourth quarter, which ended in December, representing an increase of 3.2%.

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