Rakuten and AST SpaceMobile Set Up Japan Satellite-to-Phone Venture Backed by State Grants

The company, Rakuten AST, Inc., was set up on November 6 Japan time and announced on November 9. Rakuten holds 51% of the voting rights. AST SpaceMobile holds the other 49% through AST SpaceMobile Japan Holdings II GK, a wholly owned indirect subsidiary. The venture has legal capital of 100 million yen.

The money comes from Japan's Ministry of Internal Affairs and Communications, which picked the partners' joint proposal for its J-LEO programme for low Earth orbit communications. According to the release, Rakuten AST is expected to receive the grants over roughly three years, paid through the Communications and Information network Association of Japan (CIAJ) once the company is up and running. The plan is to build the network and begin domestic service by the end of March 2029. The companies said the network is meant first to keep phones connected during disasters and other emergencies.

The deal also gives Japan's smallest mobile operator a state-funded network of its own and gives AST a guaranteed buyer for its satellites. AST will supply them, and the release says they will carry the largest phased-array antennas ever deployed in low Earth orbit. Mickey Mikitani, Rakuten Group's chairman and chief executive, called the project "a key pillar of Rakuten Mobile's network strategy." Abel Avellan, AST SpaceMobile's founder, chairman and chief executive, said it "validates the importance of space-based cellular broadband connectivity."

The partners are also promising more than coverage. Rakuten Mobile will work with AST on AI edge computing and plans to develop AI-driven spectrum management technology, according to the release. The two companies will look at faster data services and IoT products, with logistics, infrastructure monitoring, construction and agriculture named as target industries. Rakuten Mobile plans to test its satellite-to-mobile service in a commercial environment within 2026.

AST's network is still small. Light Reading reported that the company has 13 satellites in orbit and needs at least 45 to 60 to cover key markets in North America, Asia and Europe. AST says it has launch agreements covering more than 100 satellites, and launch capacity remains a constraint. Each of its Bluebird satellites has a phased-array antenna of about 223 square metres. AST counts more than 60 mobile operators as partners, including AT&T, Verizon, Vodafone and Bell Canada.

The main competitor is SpaceX's Starlink, which has about 12,000 satellites in orbit, mostly designed for broadband. The US Federal Communications Commission has just approved SpaceX's next-generation V2 satellites with direct-to-cell capability, and the first are expected to launch in 2027. In Japan, NTT and its subsidiary NTT DoCoMo Business have signed a memorandum with the Development Bank of Japan, MUFG and Mitsubishi Electric to study a near-global mega-constellation. The study will look at communications, Earth observation, positioning and timing, and space data centres, but none of the five companies has committed to building it.

Under the venture agreement, as described in AST's quarterly filing, Rakuten AST will run until its eighth anniversary or the retirement of its last satellite, whichever comes later.