Rakuten gains JPY148bn Japan backing for AST SpaceMobile satellite network

Rakuten Group, Inc. (TSE: 4755) is set to receive access to as much as ¥148 billion, or approximately $912 million, in Japanese government support for a low-Earth orbit satellite communications network. Rakuten Mobile is negotiating a joint venture with AST SpaceMobile, Inc. (NASDAQ: ASTS) to develop a direct-to-smartphone service capable of operating beyond the reach of terrestrial mobile base stations. The project forms part of Japan’s effort to reduce its dependence on foreign-controlled satellite networks while strengthening communications during earthquakes, typhoons and other emergencies. The government funding could materially reduce the financial burden of satellite procurement, launches and ground infrastructure for a mobile business that is still working towards sustained profitability. The strategic opportunity is significant, but commercial success will depend on satellite deployment, spectrum coordination, network reliability and whether customers will pay for coverage they may use only occasionally.

Why is Japan committing ¥148 billion to a Rakuten-led satellite communications network?

Japan’s decision reflects a shift in how governments view satellite communications. Low-Earth orbit networks are no longer treated primarily as specialist services for ships, remote industries or defence agencies. They are becoming part of national communications infrastructure because they can provide connectivity when terrestrial networks are unavailable, damaged or economically impractical.

Japan’s geography makes the case particularly relevant. The country contains mountainous areas, remote islands and coastal communities where comprehensive terrestrial coverage can be expensive. It also faces frequent earthquakes, severe storms and other natural hazards capable of damaging fibre routes, electricity systems and mobile base stations.

Satellite service cannot prevent those failures, but it can create a communications layer that does not rely on the same physical infrastructure. Emergency responders, local authorities and residents could continue using compatible smartphones when nearby towers are offline, provided satellites, gateways and core networks remain operational.

The economic security argument is equally important. Japan currently relies heavily on satellite networks operated by foreign companies, including services associated with SpaceX. Government support for a Rakuten-led platform is intended to establish greater domestic influence over network operations, service priorities, emergency capacity and customer data.

The project should not yet be described as completely home-grown. AST SpaceMobile is a United States company that designs and manufactures the satellite platform, while launch services will also depend on international providers. Japan is seeking greater operational control and domestic participation rather than complete independence from foreign technology.

How would a Rakuten and AST SpaceMobile joint venture change Japan’s telecom market?

The proposed joint venture would combine Rakuten Mobile’s spectrum, customer relationships and terrestrial mobile network with AST SpaceMobile’s low-Earth orbit satellite platform. This structure would allow satellite signals to connect directly with ordinary smartphones rather than requiring customers to purchase a separate satellite handset or external terminal.

That approach reduces one of the largest barriers to satellite adoption. Consumers are unlikely to carry specialised emergency equipment every day, but they already carry smartphones. A service integrated into an existing mobile subscription can therefore reach a much larger addressable market.

Rakuten Mobile could initially offer satellite connectivity as an emergency, roaming or premium coverage feature. Over time, the platform could support remote workers, maritime customers, logistics companies, utilities, connected vehicles, drones and internet-of-things devices operating outside terrestrial coverage.

The commercial model remains unclear. Rakuten Mobile could bundle limited satellite access into higher-priced subscriptions, charge separately for data usage or sell capacity to government agencies and enterprise customers. The joint venture could also provide wholesale access to other Japanese operators if regulators or project economics favour a shared national platform.

That last option would expand utilisation but reduce Rakuten Mobile’s exclusivity. A subsidised network may face political pressure to serve wider national interests rather than become a closed competitive advantage for one operator. The final governance and access arrangements will therefore shape both public value and shareholder returns.

Can direct-to-smartphone satellite service reduce Rakuten Mobile’s coverage disadvantage?

Rakuten Mobile entered Japan’s mobile market with a cloud-native network and aggressive pricing, but it has spent heavily to build coverage against established operators with mature tower footprints. Satellite connectivity could help Rakuten Mobile address remaining rural and remote gaps without constructing terrestrial infrastructure in every low-density location.

The economic appeal is straightforward. Building and maintaining a base station for a small number of users can generate weak returns, particularly when sites require difficult access, new power connections or extensive backhaul. One satellite network can cover large geographic areas, although total capacity must still be shared among users.

Satellite service will not replace terrestrial infrastructure in cities. Mobile towers and fibre networks offer greater capacity, lower latency and more predictable performance in areas with concentrated demand. The satellite layer is better understood as a coverage extension and resilience product than a substitute for Rakuten Mobile’s core network.

Rakuten Mobile ended March 2026 with 10.36 million subscriptions, representing an increase of 1.74 million from a year earlier. Mobile segment revenue rose 18.5% to ¥131.2 billion during the first quarter, while the non-GAAP operating loss narrowed by ¥13.3 billion to ¥38 billion.

The mobile operator achieved positive first-quarter earnings before interest, tax, depreciation and amortisation of ¥1 billion, but the wider operating loss shows that financial recovery is incomplete. Rakuten Mobile also spent ¥26.2 billion on capital expenditure during the quarter as it continued improving its terrestrial network.

The maximum satellite grant is more than five times that quarterly capital expenditure. However, the funding will support the project rather than flow directly into Rakuten Group’s ordinary earnings. Investors should treat it as capital-risk reduction, not as immediate profit.

Why does disaster resilience make satellite connectivity strategically important for Japan?

Communications failures can magnify the damage caused by natural disasters. When power, fibre and mobile towers fail together, emergency services may struggle to coordinate rescues, residents may be unable to contact relatives and local governments can lose visibility over affected areas.

A low-Earth orbit network can provide an alternative path because the most important infrastructure is located in space. Ground gateways and mobile core systems remain necessary, but these can be geographically distributed and protected more effectively than thousands of local base stations.

Rakuten Mobile and AST SpaceMobile have already demonstrated a space-based video call in Japan using an ordinary smartphone. The test provided technical evidence that the basic connection can work, although a controlled demonstration is very different from providing reliable service to millions of users during a major emergency.

The Japanese government will expect the network to support priority access during disasters. That may require reserved capacity for emergency responders, local authorities and critical infrastructure operators. Commercial users could experience restricted service when public safety demand rises.

The resilience case also extends beyond natural disasters. Satellite connectivity could support maritime security, remote infrastructure monitoring and communications continuity during cyberattacks or physical sabotage affecting terrestrial networks.

This strategic role justifies public funding, but it also creates higher reliability expectations. A government-supported emergency network cannot operate like an experimental consumer product that occasionally works when the sky is clear and customer traffic is light.

How does the project compare with Starlink without becoming a simple copy of Starlink?

The proposed Rakuten network will inevitably be compared with SpaceX’s Starlink because both use low-Earth orbit satellites to expand connectivity. The business models and technical architecture are not identical.

Starlink built its original broadband service around dedicated user terminals linked to a large satellite constellation. SpaceX has also expanded into direct-to-cell connectivity through partnerships with mobile operators. AST SpaceMobile has focused specifically on delivering broadband through partner spectrum to ordinary smartphones.

Rakuten Mobile’s service would therefore be closely integrated with its existing mobile network, customer authentication systems and licensed frequencies. Users may not need to select a separate satellite provider or install additional hardware.

AST SpaceMobile’s next-generation BlueBird satellites are designed with very large communications arrays and peak capacity exceeding 150 megabits per second within individual coverage cells under suitable conditions. Real-world customer performance will depend on user numbers, spectrum allocation, geography, device conditions and network scheduling.

Starlink retains major advantages in deployment scale, launch access, operating experience and financial resources. SpaceX can launch its own satellites, while AST SpaceMobile must purchase launches from external providers. That difference affects deployment speed, cost and control over schedules.

Rakuten’s advantage could come from domestic integration and government alignment. A Japanese operator controlling the customer relationship, local spectrum and emergency-service arrangements may offer benefits that a foreign-controlled network cannot replicate as easily.

The project is therefore not simply Japan building another Starlink. It is Japan supporting a domestic telecom operator that will use an American satellite platform to create a more locally controlled service.

What financial burden and execution risk would the satellite programme create for Rakuten?

Government support reduces risk, but it does not remove it. The ¥148 billion figure is a maximum grant and may be released over several years against project milestones, eligible expenditure and performance reviews.

Rakuten and AST SpaceMobile must still determine how much equity each party contributes to the joint venture, who owns the satellites and ground infrastructure, and how future operating losses will be divided. These details will determine whether Rakuten receives a capital-light service platform or assumes another large infrastructure commitment.

Rakuten Group has spent years financing its entry into mobile telecommunications. Losses, network construction and debt requirements have weighed on investor confidence even as its e-commerce and financial technology businesses generated stronger earnings.

A satellite network could improve Rakuten Mobile’s competitive position, but it also creates exposure to launch delays, satellite failures and technology obsolescence. Replacing a failed terrestrial base station can be inconvenient. Replacing a failed satellite requires a rocket, a launch window and a noticeably larger invoice.

AST SpaceMobile presents its own financial risk. The company generated first-quarter 2026 revenue of only $14.7 million while recording a net loss attributable to common shareholders of approximately $191 million. Its long-term debt stood near $3 billion at the end of March, reflecting the enormous capital required to manufacture and deploy its constellation.

The Japanese government grant could become one of AST SpaceMobile’s most important sources of project de-risking. It could also increase dependency on a company that has yet to demonstrate mature, profitable commercial operations at global scale.

Why is spectrum integration with terrestrial networks the hardest technical challenge?

A direct-to-smartphone satellite network must share or coordinate spectrum that is also used by terrestrial mobile systems. Satellites cover large areas, while terrestrial base stations serve smaller cells with carefully managed frequencies and power levels.

Poor coordination could create interference between the two layers. The network must determine when a smartphone should connect to a tower, when it should use a satellite and how the handover occurs without interrupting voice or data services.

Satellite movement creates additional complexity through propagation delays and changes in signal frequency. The system must also manage rapidly changing coverage areas as satellites move across the sky rather than remaining fixed above one location.

Rakuten Mobile and the University of Tokyo have secured access to a separate JAXA funding programme worth up to ¥11 billion for research into satellite and terrestrial network integration. The project is developing AI-based systems to manage power, frequency use, interference and traffic distribution.

This work could become strategically valuable beyond the initial satellite service. Networks supporting autonomous vehicles, drones and remote industrial systems will require continuous connectivity across terrestrial and satellite infrastructure.

The risk is that technical integration takes longer than expected. A network that provides an occasional emergency text message has a lower performance threshold than one supporting video, enterprise applications or vehicle connectivity. Commercial promises must remain aligned with demonstrated service quality.

What does the June 30 stock reaction say about Rakuten and AST SpaceMobile sentiment?

Rakuten Group shares closed at ¥753.40 on June 30, rising 5.44% during the session as trading volume reached approximately 35.9 million shares. That volume was more than twice the recent daily average, indicating that investors treated the subsidy as a material development rather than a minor research grant.

The shares gained approximately 9% over five trading sessions but remained down around 3.4% over one month. Rakuten traded within a 52-week range of ¥686.10 to ¥1,068.50, leaving the stock close to the lower end of its annual range despite the satellite-driven rally.

The market reaction suggests that investors value government support because it reduces the amount Rakuten may need to fund independently. It also creates a potential strategic differentiator for a mobile operation that has struggled to translate subscriber growth into consistent operating profit.

AST SpaceMobile shares were trading around $88.86 on June 30, approximately 2.4% above the previous close. The stock had gained roughly 22% from its June 23 close but remained about 22% below its May 29 level, within a 52-week range of $36.08 to $133.86.

AST SpaceMobile’s volatility reflects investor enthusiasm about direct-to-device connectivity alongside concerns over launch execution, capital requirements and near-term losses. The Japanese project strengthens its commercial credibility but does not resolve those underlying risks.

For Rakuten, the rally aligns with the strategic importance of the announcement. It should not be interpreted as proof that the satellite service will become profitable. The government has funded an opportunity, not guaranteed a business model.

What must happen before the government grant becomes a commercially viable network?

The first requirement is a definitive joint venture agreement between Rakuten Mobile and AST SpaceMobile. Investors need clarity on ownership, governance, capital contributions, intellectual property and responsibility for future funding.

The second requirement is a detailed grant structure. Rakuten must disclose the project timetable, eligible costs, performance milestones and conditions attached to the maximum ¥148 billion allocation.

The third requirement is regulatory approval covering spectrum use, satellite operations, customer data and emergency-service priorities. The network must operate alongside terrestrial systems without creating unacceptable interference.

The fourth requirement is sufficient satellite deployment. Demonstrations using a small number of spacecraft do not provide continuous nationwide service. Commercial availability requires enough satellites in the correct orbits, supported by replacement capacity and ground infrastructure.

The fifth requirement is a credible pricing model. Satellite access could improve customer retention and attract rural users, but the revenue opportunity will remain limited if consumers view it only as an emergency feature they expect to receive free.

The sixth requirement is clear service performance. Rakuten Mobile must explain which functions will be available at launch, which devices will be compatible and how capacity will be prioritised during congestion or disasters.

The seventh requirement is evidence that satellite integration lowers the total cost of providing nationwide coverage. The project creates value only if avoided terrestrial expenditure, additional revenue and public-sector contracts justify the capital and operating costs.

Japan’s support gives Rakuten Mobile and AST SpaceMobile a rare opportunity to build a nationally strategic communications platform with substantial public funding. The concept fits Japan’s geography, disaster exposure and economic security priorities.

The difficult part begins after the subsidy announcement. Rakuten and AST SpaceMobile must convert government backing, experimental calls and ambitious satellite specifications into a service that works reliably when terrestrial communications fail and customers need it most.

Key takeaways on what Japan’s satellite grant means for Rakuten and AST SpaceMobile

• Japan will provide up to ¥148 billion for a Rakuten-led low-Earth orbit satellite communications project.
• Rakuten Mobile is negotiating a joint venture with AST SpaceMobile, but ownership and financing terms remain undisclosed.
• The network is intended to connect ordinary smartphones outside terrestrial coverage and during major disasters.
• Government funding reduces Rakuten’s capital exposure but should not be treated as immediate revenue or profit.
• Satellite coverage could help Rakuten Mobile fill remote network gaps without constructing base stations in every low-density area.
• Japan’s economic security objective is greater domestic control, although the satellite technology and launch ecosystem will remain internationally dependent.
• Starlink has greater deployment scale, while Rakuten could benefit from local spectrum, mobile-network integration and government alignment.
• AST SpaceMobile brings proven demonstrations and major telecom partnerships but remains loss-making and highly capital intensive.
• Rakuten’s 5.44% share-price gain indicates investor support for the funding, although the stock remains close to the lower half of its annual range.
• Commercial success will depend on satellite deployment, spectrum coordination, disaster reliability, customer pricing and disciplined joint venture financing.