Macquarie’s Asia fund and British Columbia Investment Management will invest up to $2Billion in Rakuten Group’s mobile network assets through a consortium in a sale-leaseback arrangement.
Tokyo-brd According to a statement, Rakuten Mobile, which offers 4G and 5G Internet service, wants 150-300 billion yen ($1-2 billion) from the transaction and will manage and operate the communications facilities over the decades-long lease. SMBC Nikko Securities arranges.
The statement said Rakuten Group is fundraising to enhance its balance sheet by decreasing total interest-bearing debt and managing debt maturities.
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Rakuten Mobile said its profitability has been improving due to a steady increase in subscribers and a reduction in capex. The parent group’s free cash flow in its Internet services business and dividends from its fintech segment continue to grow as it aims to self-fund its mobile arm by the end of the year.
“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,” said Rakuten Group chairman and CEO Mickey Mikitani.
In 2022, Macquarie Asia-Pacific Infrastructure Fund 3 closed with nearly $4.2 billion, enabling Rakuten Mobile’s participation.
Since the Tokyo Stock Exchange stated it will focus on price-to-book ratios, capital efficiency, and M&A code revisions to allow take-private bids and international investors, buyout investors have been excited. M&A activity may increase this year as private capital investors have greater supply.
“We believe Japan’s commitment to revitalise its digital economy and accelerate the pace of digital transformation presents significant opportunities to investors in the digital infrastructure sector,” said Verena Lim, Macquarie Group’s CEO for Asia.
Sale-leaseback deals for listed corporations’ infrastructure projects have grown in Asia-Pacific over the past decade. The method allows owners to sell capex-heavy hard assets to improve their finances and stay in the same places.
Indosat Ooredoo Hutchison, Indonesia’s second-largest telcom business, is considering a sale-leaseback of its fibre and submarine cable assets for up to $2 billion.
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PLDT, helmed by local entrepreneur Manuel Pangilinan, raised 2.8 billion pesos ($47 million) last year by selling telco towers to Frontier Tower Associates Philippines, a parent company of KKR-backed Pinnacle, then leasing them back.
About Rakuten Mobile
Rakuten Mobile debuted its MVNO service in 2014 and has a large market share.
Next, Rakuten Group will focus on their operations as a fourth Japanese mobile network carrier.
