Rakuten Group and U.S.-based AST SpaceMobile have agreed to set up a joint venture to build a satellite network in Japan that connects directly to ordinary smartphones, with the venture expected to receive up to 148 billion yen (about $1 billion) in government support over roughly three years.

The deal gives Rakuten Mobile, which is still loss-making, a state-funded path to satellite coverage. For investors in Asia it also shows Tokyo putting public money into a domestically controlled satellite network, framed by both companies as a matter of disaster resilience and economic security.

Rakuten AST: Ownership, Funding and Timeline

The new company, Rakuten AST, Inc., will be 51% owned by Rakuten Group and 49% by AST SpaceMobile Japan Holdings II GK, an indirect wholly owned subsidiary of the Nasdaq-listed AST SpaceMobile, the companies said in a joint release dated Nov. 9. The agreement to form it was struck on Nov. 6, Japan time. It will have legal capital of 100 million yen, be based at Rakuten's Setagaya, Tokyo, headquarters and be led by Ryoji Osaka as representative director and CEO.

The funding comes from Japan's Ministry of Internal Affairs and Communications, which selected a joint proposal from a Rakuten preparatory company and Rakuten Mobile for its J-LEO low Earth orbit satellite communications project. The grant will flow through the Communications and Information Network Association of Japan, which manages the fund, once Rakuten AST is formally established.

The venture will procure satellites from AST SpaceMobile, run the network and aim to begin domestic operations by the end of March 2029. Because the base station equipment sits on the ground in Japan, Japanese operators can manage the network on their own, the release said. The project also plans a framework for emergency roaming between mobile operators, so that customers of other carriers could connect during disasters.

Rakuten Chairman and CEO Mickey Mikitani called the project "a key pillar of Rakuten Mobile's network strategy" and said the company would seek to maximize capital efficiency. AST SpaceMobile founder and CEO Abel Avellan said the deal would also strengthen his company's global network by using capacity that can be sold outside Japan.

What AST SpaceMobile Brings

AST SpaceMobile builds large satellites designed to talk to unmodified phones using mid-band cellular spectrum. Its next-generation satellites will carry a phased array of about 223 square meters, which the company says is the largest ever deployed in low Earth orbit, with peak speeds nearly double those of its first Block 1 BlueBird satellites. Those earlier satellites reached a peak downlink speed of 98.9 Mbps in tests, according to the release.

The U.S. company said it has agreements with about 60 mobile network operators representing more than 3 billion subscribers, and partnerships with AT&T, Verizon, Vodafone and Google, among others. Rakuten has been a partner since March 2020, when Rakuten and Vodafone invested in AST & Science's space venture.

Outside Japan, Rakuten AST plans to work with AST SpaceMobile to sell its services to customers worldwide, subject to regulatory approval. Separately, Rakuten Mobile still plans to begin testing a satellite-to-mobile service in a commercial environment within 2026 under the older partnership. The companies also want to sell connectivity to logistics, construction, agriculture and infrastructure monitoring businesses.

Rakuten Mobile Losses Still Narrowing

The satellite push comes as Rakuten tries to show its costly mobile network can pay its way. In the April to June quarter, the group posted its first quarterly net income in six years, at 7.7 billion yen, on record second-quarter revenue of 665.5 billion yen, up 11.6% from a year earlier, according to its results release.

The mobile segment remained in the red. Its revenue rose 8.3% to 121.4 billion yen, while its non-GAAP operating loss narrowed by 4.1 billion yen to 33.1 billion yen. Rakuten Mobile had 10.75 million subscriptions at the end of June, a net gain of 1.78 million from a year earlier, and average net revenue per user of 2,516 yen, up 42 yen, the company said. TelecomTV carried the same figures in its summary of the results.

Rakuten has kept its capital spending plan for 2026 at 200 billion yen and spent 39.3 billion yen in the second quarter, much of it on new base stations to improve network quality. The J-LEO grant means a large share of the satellite build will be paid for with public money rather than from that budget, though the companies did not say how much each partner will invest beyond the grant.

The group raised about 200 billion yen by selling securities in May and said funding for all of its 2026 bond redemptions is secured. Investors will look for more detail on Rakuten AST's spending and on Rakuten Mobile's subscriber count when the group reports its third-quarter results.