Rakuten Mobile raises funds from Macquarie Asset Management-led consortium through leasing of mobile network assets

Rakuten Group, Inc. and Macquarie Asset Management today announced that Rakuten Mobile, Inc., a subsidiary of Rakuten Group, will raise between JPY 150 billion to 300 billion (around $US1-2 billion)¹ in funds for the sale and leaseback of a portion of its mobile network assets with a consortium of global leading infrastructure investors, led by Macquarie Asset Management and including British Columbia Investment Management Corporation, via the Macquarie Asia-Pacific Infrastructure Fund 3.

Through this arrangement, Rakuten Mobile will conduct fundraising in the form of a sale and leaseback transaction and will continue to manage and operate these mobile network assets. Rakuten Group will promptly announce the final amount and other conditions in due course.

Mickey Mikitani, Chairman and CEO of Rakuten Group, said, “I am delighted to announce this innovative partnership with Macquarie Asset Management, one of the world's leading infrastructure investors. They strongly believe in our vision for the future, and together, we've made our financial foundation even stronger. Rakuten Mobile is already well on its way to profitability, and with our new initiative, we will continue to build on this momentum as we aim to reach profitability even faster and become the top mobile carrier in Japan.”

Verena Lim, Co-Head of Asia-Pacific Macquarie Asset Management Infrastructure and Chief Executive Officer of Macquarie Group in Asia, said, “We believe Japan’s commitment to revitalize its digital economy and accelerate the pace of digital transformation presents significant opportunities to investors in the digital infrastructure sector. The Rakuten Ecosystem and Rakuten Mobile’s network is at the very forefront of this digital evolution, and we are excited to partner with Rakuten Mobile to support and accelerate its business growth."

Macquarie has been present in Japan for more than 24 years, and Macquarie Asset Management has been investing in Japan as well as connecting Japanese investors to global opportunities across infrastructure, green investment and real estate. With deep expertise in managing funds in Asia-Pacific, together with on-the-ground teams equipped with strong local market knowledge and deep relationships, Macquarie continues to deliver investment opportunities and value for its clients.

Objective of this funding

The Rakuten Group is committed to its financial strategy of pursuing financing measures that balance growth-oriented investment with mid-to-long-term financial soundness and is currently working on balance sheet management through a reduction of total interest-bearing debt and proactive debt maturity management.

Rakuten Mobile’s profitability has been improving in accord with a steady increase of its subscriber base and capex reduction. Furthermore, Rakuten Group’s free cash flow in the Internet Services segment and dividends received from the Fintech segment continue to increase. The Group finance strategy aims to establish self-funding for the financing needs of Rakuten Mobile through internal cash flows within the Group by the end of this year.

Rakuten Mobile's cash flow before marketing costs is making steady progress towards profitability. At the same time, based on the assumption that a certain level of capital investment will continue in the future, it is important for the Group’s financial strategy to ensure adequate liquidity until Rakuten Mobile achieves positive free cash flow on a standalone basis.

The large-scale capital financing of Rakuten Mobile improves its liquidity and establishes its self-funding platform. Additionally, the cash flow generated from Rakuten’s Internet Services and Fintech businesses can be prioritized for reducing its interest-bearing debt, thereby enhancing its liquidity position in the Rakuten Group.

Securing long-term and large-scale funding for Rakuten Mobile from leading global infrastructure investors, to meet immediate funding needs, not only contributes to diversifying the company’s financing methods and expanding its investor base but also is expected to further strengthen the Group's financial foundation.

1. The companies will announce the final amount of the financing when fixed.
2. Capex for this year is expected to be approximately JPY 100 billion, as originally planned. In 2025, maintenance cost is expected to be limited, and there is no expected need for a significant investment related to capacity expansion. Therefore, the capex is expected to remain at a subdued level.

About Macquarie Asset Management (MAM) and Macquarie Asia-Pacific Infrastructure Fund 3 (MAIF3)

Macquarie Asset Management (MAM) is a global asset manager, integrated across public and private markets. Trusted by institutions, governments, foundations and individuals to manage approximately $US611.7 billion in assets, MAM provides a diverse range of investment solutions including real assets, real estate, credit and equities & multi-asset.

MAM is part of Macquarie Group, a diversified financial group providing clients with asset management, finance, banking, advisory, and risk and capital solutions across debt, equity and commodities. Founded in 1969, Macquarie Group employs over 20,600 people in 34 markets and is listed on the Australian Securities Exchange. All figures as at 31 March 2024.

MAIF3 is the third vintage of MAM’s Asia-Pacific Infrastructure Fund series and had its final close in June 2022 with over $US4.2 billion in investor commitments. The total capital managed under the Macquarie Asia-Pacific Infrastructure Fund series represents over $US16 billion, with digital investments including Vocus Group (a leading specialist fiber and network solutions provider in Australia), Airtrunk (a leading hyperscale data center operator in Asia Pacific), and Bersama Digital (a Southeast Asian regional digital infrastructure platform, with a majority stake in Tower Bersama Infrastructure, a leading independent telecommunication towers business in Indonesia).

About British Columbia Investment Management Corporation

British Columbia Investment Management Corporation (BCI) is amongst the largest institutional investors in Canada, with C$250.4 billion in gross assets under management as of March 31, 2024. Based in Victoria, British Columbia, with offices in Vancouver, New York, and London, U.K., BCI manages a portfolio of diversified public and private market investments on behalf of its British Columbia public sector clients. BCI’s infrastructure & renewable resources (I&RR) program, valued at approximately C$28.1 billion, invests in tangible long-life assets in the Americas, Europe, and Asia Pacific region, including direct investments in regulated utilities, energy, telecommunications, transportation, timberlands, and agri-businesses.

BCI’s I&RR program has a global portfolio with seven active investments in the Asia-Pacific region including Summit DigiTel (a leading communications tower company in India), Cube Highways (the largest toll road operator in India), and Costa Group (Australia’s leading vertically integrated high-value crop producer). The program continues to expand its presence in the region with the addition of this sale and lease-back transaction with Rakuten Mobile. For more information, visit www.bci.ca.

About Rakuten Mobile

Rakuten Mobile, Inc. is a Rakuten Group company responsible for mobile communications, centered on its mobile network operator (MNO) business. Through continuous innovation and the deployment of advanced technology, Rakuten Mobile aims to redefine expectations in the mobile communications industry in order to provide appealing and convenient services for diverse customer needs.

About Rakuten

Rakuten Group, Inc. (TSE: 4755) is a global technology leader in services that empower individuals, communities, businesses and society. Founded in Tokyo in 1997 as an online marketplace, Rakuten has expanded to offer services in e-commerce, fintech, digital content and communications to 1.8 billion members around the world. The Rakuten Group has more than 30,000 employees, and operations in 30 countries and regions. For more information visit https://global.rakuten.com/corp/.

1. Based on currency rate as of August 5, 2024.