Rakuten shares increase as mobile losses decrease

On Monday morning, Rakuten Group shares rose after the e-commerce behemoth revealed that losses at its cash-strapped mobile unit had shrunk.

When the markets opened, shares surged as much as 5.2%, reaching 596.9 yen before losing part of their gains. Due to a holiday, Japanese markets were closed on Friday.

As a result of its mobile offering failing to draw in enough customers to cover the significant costs of network construction, the April–June period marked Rakuten's 12th consecutive quarter of losses.

However, it appears that cost-cutting measures are working.

Following the release of last Thursday's earnings, a research note from Jefferies attributed Rakuten's cost reductions to its roaming agreement with KDDI, one of Japan's three incumbent networks.

Rakuten has turned to publicly listing its more lucrative divisions in order to raise money; the company listed its internet banking operation, Rakuten Bank, in April and filed an application to list its securities operation in July.

Rakuten also made plans to merge its points and payments businesses into Rakuten Card, its credit card and loan division, last week. The prospect of listing the company later was left open.

Rakuten also promised not to take on any additional gross debt and to use equity-related financing to lower its debt level instead.

Refinitiv data shows that the group owes 1.9 trillion yen ($13.11 billion) in total, with 406 billion yen due in 2024 and an additional 430 billion yen due in 2025.