Stage X and Rakuten tie-up looks ahead to 6G

South Korea's newest mobile operator is essentially tapping into the experience of Rakuten Mobile, which was in a similar position just over four years ago, before it launched services as Japan's fourth MNO. It too is on the cusp of breaking into a well-established telecoms market and, as Rakuten well knows, it will need all the help it can get to make a success of it.

"Rakuten Mobile built and deployed the world’s first fully virtualized, cloud-native mobile network with a modern infrastructure that ensures stable telecommunication services as the newest mobile network operator in Japan," said Sangwon Seo, CEO of Stage X, a footnote clarifying that he means the first large-scale commercial network of that description.

"As Stage X builds out its infrastructure to provide 5G services in the 28 GHz spectrum, we look forward to working with Rakuten and learning from their experience across a wide range of areas," Sangwon added.

Stage X picked up spectrum in the 28 GHz band earlier this year, coming out on top in an auction of airwaves that had previously been allocated to South Korea's three main mobile network operators but were withdrawn by the government after the telcos failed to meet rollout requirements. There was some doubt over whether new players would be willing to step into the breach, but the sale ultimately attracted three bidders.

Further, Stage X's winning offer of 430.1 billion won (US$322 million) was more than twice what SK Telecom, KT Corp and LG U+ had paid for the frequencies in 2018 and much more than the industry had predicted. It is clearly serious about breaking into the South Korean mobile market and this week's deal with Rakuten serves as further evidence of its intent.

The government has put pressure on the established mobile operators to reduce prices and increase competition, but nonetheless, Stage X will not find it easy to break into the market.

Market leader SK Telecom ended 2023 with 31.3 million mobile subscribers, including a sizeable 15.7 million 5G users. LG U+ had 18.7 million at the same date and KT 17.8 million, both with high proportions of 5G customers. And together the three served close to 16 million MVNO customers. All of which means, Stage X will be tackling market of 84 million mobile connections when it launches services, likely next year.

Rakuten Mobile did something very similar and is living proof that it is no easy task. When it launched services in spring 2020 there were around 182 million mobile subscribers in Japan, split between its big three operators NTT DoCoMo, KDDI and Softbank, according to data from the country's Telecommunications Carriers Association.

By the end of 2023 Rakuten Mobile had signed up just shy of 6 million customers and was still in the red. It is shooting for monthly EBITDA breakeven by the end of this year and annual breakeven in 2025.

Stage X can certainly learn a lot from Rakuten Mobile's experience as a market newcomer, including the fact that it is in for a tough ride.

The deal is not just about sharing experience though, although the firms are highlighting that element in particular.

It will also see Stage X become a Rakuten Symphony customer, which suggests it is looking to roll out cloud-native Open RAN infrastructure. At this stage, the company simply refers to buying "industry leading telecom solutions" from Rakuten's mobile technology arm though.

"In addition, the three companies will pursue cooperation considering expansion to mid-band frequency and the development of a 6G-based national network from a long-term perspective," the firms' announcement reads.

They had nothing to add with regard to specific plans for 6G. But this being about market newcomers and cloud native networks, it would have been surprising had they not factored the next generation of mobile technology into their partnership.