Rakuten Mobile’s Second-Quarter Loss Narrows, but Misses Our Projections; FVE Reduced to JPY 1,100

Based on the weaker-than-expected improvement of the mobile business in the June quarter, we cut our 2027 revenue and operating income projection for Rakuten to JPY 2.78 trillion and JPY 269 billion, from JPY 2.95 trillion and JPY 326 billion, respectively, and lowered Rakuten’s fair value estimate to JPY 1,100 from JPY 1,300 accordingly. We think accelerating subscription growth and reducing roaming costs through expanding network coverage will continue to be the key for Rakuten mobile to become profitable. Although we lowered our fair value estimate, we retain our view that the stock is undervalued, as we believe that Rakuten is making solid progress in monetizing its user base and that mobile users will make a larger contribution to Rakuten’s ecosystem in the longer run.