Japan' Rakuten, KDDI to tie up, challenging NTT Docomo, SoftBank

A man walks under a logo of Rakuten Inc during a news conference in Tokyo February 14, 2014. REUTERS/Yuya Shino

TOKYO (Reuters) - Rakuten Inc on Thursday unveiled a tie-up with telecom company KDDI Corp as the Japanese e-commerce firm aims to enter the mobile phone services business, challenging bigger rivals NTT Docomo and SoftBank Group Corp.

KDDI will give Rakuten access to its nationwide roaming services, while Rakuten will provide KDDI its expertise in mobile payments, the two companies said in a statement.

The government has backed Rakuten’s planned entry into mobile services next year, saying increased competition will benefit consumers. But analysts have been sceptical that Rakuten will be able to build out a sufficient network to provide reliable, high-speed services on its own.

The deal comes as the country’s major telecom operators are under government pressure to cut their prices and enable consumers to spend on other items.

Shares of NTT Docomo tumbled nearly 15 percent on Thursday after it said lower fees will start hurting its earnings from the next fiscal year. Shares of SoftBank, which plans an initial public offering of its mobile phone business in December, fell over 8 percent.

Reporting by Ayai Tomisawa and Sam Nussey; Editing by Clarence Fernandez, Amrutha Gayathri