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Issuer Summary: Rakuten Group

Issuer: Rakuten Group | Document: Issuer Summary | Date: 2026-05-02

1. Credit View and Monitoring Focus

Rakuten Group is neither a simple domestic e-commerce company, nor a simple telecom operator, nor a simple fintech holding company. It is one of Japan's most distinctive digital, fintech, and mobile conglomerates. From a credit perspective, the central issue for the issuer is how it manages holding company-level funding pressure and capital consumption in the mobile business, while retaining strong fintech assets and a large membership base. As of May 2, 2026, the latest confirmed full-year results disclosure was the FY2025 results released on February 12, 2026; the latest important structural event was the resumption of discussions on fintech business reorganization on February 25, 2026; and Q1 2026 results had not yet been disclosed. This timing matters: the current credit view is at the stage of confirming the FY2025 improvement while assessing whether that improvement can be sustained into FY2026.

FY2025 was a year that clearly improved the credit view on Rakuten. Consolidated revenue was JPY 2,496.6 billion, IFRS operating profit was JPY 14.4 billion, Non-GAAP operating profit was JPY 106.3 billion, and EBITDA was JPY 435.9 billion, with the improvement in mobile earnings making a significant contribution to consolidated profitability. In particular, Rakuten Mobile achieving positive full-year EBITDA on a standalone basis for the first time, the group securing IFRS operating profit on a consolidated basis for a second consecutive year, re-accessing the domestic retail bond market in July 2025, and issuing domestic perpetual subordinated bonds in October 2025 all reduced the probability of the scenario that the market had strongly feared in 2023–2024: mobile would continue consuming cash and the holding company's market access would narrow.

That said, this does not mean Rakuten can now be re-rated as a stable investment-grade holdco. FY2025 net loss attributable to owners of the parent was JPY 177.9 billion, and the net loss remains heavy relative to the thin IFRS operating profit. Mobile turned positive on an EBITDA basis, but the Mobile segment still posted a Non-GAAP operating loss of JPY 161.8 billion, and Rakuten Mobile on a standalone basis also posted a Non-GAAP operating loss of JPY 166.0 billion. In addition, network-related capex of more than JPY 200 billion is planned for FY2026, and it will still take time before the mobile business reaches accounting profitability or sufficiently restrains capital consumption. Therefore, the main issue in Rakuten credit is not "whether it has become profitable," but "to what extent mobile improvement actually translates into improved debt repayment capacity at the holding company."

In addition, Rakuten's credit cannot be understood from the absolute level of consolidated earnings alone. High-quality fintech assets such as Rakuten Bank, Rakuten Card, and Rakuten Securities are central to group value and earnings power, but from the perspective of parent company creditors, they are subject to constraints from regulation, minority shareholders, joint control, and capital policy. The resumption of fintech business reorganization discussions, including Rakuten Bank, on February 25, 2026 showed room for group structure optimization and lower funding costs, but it also brought execution, regulatory, and minority shareholder protection issues back to the forefront. In other words, Rakuten's credit case is less a simple earnings improvement story than a structural question: how far can the value of high-quality fintech assets be converted into stability of holding company debt?

At this stage, Rakuten is a credit that has "improved considerably from before, but is still not defensive." The strong membership ecosystem, expanding fintech profits, improved funding in the domestic market, and mobile EBITDA profitability are clear supports. On the other hand, the holding company structure, constraints on cash upstreaming from fintech subsidiaries, the high investment burden in mobile, heavy reliance on capital markets, and uncertainty around reorganization cap the assessment. Rakuten bonds are therefore no longer turnaround credits just emerging from crisis, but neither are they credits that can be held with the same stability as banks or mature telecom majors. The credit remains at a stage where investors should recognize the improvement trend while continuing to monitor funding conditions, the reduction of accounting losses in mobile, and the concrete progress of fintech reorganization.

2. Business Snapshot: What is Rakuten Group?

Rakuten Group is one of Japan's leading digital platform holding companies, built around a membership base and points program and spanning internet services, fintech, and mobile. As of end-December 2025, it had more than 70 businesses, approximately 2.1 billion members worldwide, a business base across 30 countries and regions, and 29,419 consolidated employees. FY2025 consolidated revenue reached JPY 2,496.6 billion, and consolidated total assets reached JPY 28,804.4 billion. For credit analysis, it is more appropriate to define Rakuten as a large ecosystem that connects domestic e-commerce, card, banking, securities, payments, and mobile through member IDs and points, rather than to explain it by the ranking of any single business.

Its main revenue sources fall into three categories. The first is Internet Services, comprising Rakuten Ichiba, Rakuten Travel, digital content, advertising, and overseas businesses. The second is FinTech, including Rakuten Card, Rakuten Bank, Rakuten Securities, and Rakuten Pay, which currently forms the core of group earnings. The third is Mobile, centered on the MNO business, which was historically the largest source of credit pressure but is now gradually shifting into an improvement driver. In analyzing Rakuten credit, it is necessary to distinguish among these three pillars in terms of "which businesses generate stable cash" and "which businesses consume capital."

Rakuten's distinctive feature is not merely that these businesses exist in parallel, but that they are mutually connected through member acquisition, cross-selling, point rewards, payment pathways, and data integration. Management clearly positions this as the Rakuten Ecosystem, with maximization of member lifetime value and minimization of acquisition costs at the center of the strategy. From a credit perspective, this integration raises customer switching costs and promotional efficiency, while also creating a structure in which the group as a whole supports heavy investment projects such as mobile. In other words, the ecosystem is a strength, but it also complicates capital reallocation within the group.

Within the business portfolio, FinTech has the greatest impact on credit quality. Rakuten Card's transaction volume, Rakuten Bank's deposits, and Rakuten Securities' account growth form a relatively recurring profit base, albeit with some exposure to the economic cycle. By contrast, Internet Services is a stable earnings driver, but it is defended less by pure structural barriers to entry than by brand strength, membership base, and integrated promotional operations. Mobile remains the most volatile. Therefore, Rakuten should be understood not as a "large internet company," but as an issuer in which "a digital holding company with high-quality fintech assets continues to develop a telecom business."

Another important point is that Rakuten is not an entity that holds massive financial assets and liabilities on a standalone basis, but rather a holding company that includes regulated businesses such as banking, cards, and securities within its consolidated perimeter. The scale of consolidated total assets of JPY 28.8 trillion reflects the balance sheets of financial subsidiaries such as Rakuten Bank. It is therefore wrong to look only at total asset size and conclude that the group is "large and safe." Investors must assess which assets are located in which legal entities and to what extent they can serve as repayment resources for parent company creditors. Rakuten credit analysis must always track consolidated earnings power and holding company constraints at the same time.

3. What Changed Recently

The most significant recent change is that Rakuten Group is gradually shifting its positioning from "an issuer that continues to rely on capital markets to fund mobile losses" to "an issuer for which self-sustaining stabilization is beginning to come into view, supported by mobile improvement and funding diversification." The FY2025 results announced on February 12, 2026 confirmed revenue growth and earnings improvement at the consolidated level, and Rakuten Mobile achieved positive full-year EBITDA on a standalone basis for the first time. This was a substantive step forward on the long-standing central issue for Rakuten credit and carries more weight than a mere one-quarter improvement.

At the same time, the funding environment clearly improved in 2025. Rakuten re-accessed the domestic yen bond market in July 2025, including sustainability bonds, and in August of the same year issued JPY 130.0 billion of three-year domestic unsecured bonds. In October 2025, it issued JPY 82.0 billion of domestic perpetual subordinated bonds and moved ahead with preparations for the first call of the USD-denominated NC5 perpetual subordinated bonds issued in 2021. On February 24, 2026, it announced the redemption of the USD 750 million notes on April 22, 2026. These developments show not only that Rakuten secured funding, but also that it is gradually reducing its dependence on higher-cost foreign currency and hybrid funding.

On the other hand, not all recent changes are positive. On February 25, 2026, Rakuten announced the resumption of discussions toward a reorganization of its fintech business, including Rakuten Bank. The stated aims of the reorganization include stronger coordination among banking, card, and securities, data integration, use of AI, and optimization of funding costs across the FinTech business, and the rationale is understandable from the perspective of maximizing group value. From a credit perspective, however, uncertainty also increases around the legal form of the reorganization, treatment of minority shareholders, regulatory approvals, capital policy, and the review of parent-subsidiary relationships. Recent developments are therefore characterized by the simultaneous progression of "earnings improvement" and "structural redesign."

Taken together, Rakuten is clearly in an improvement phase, but it has not yet moved into a simplified stability story. Mobile improvement and funding diversification have reduced downside credit risk. At the same time, fintech reorganization creates upside potential while also introducing new execution risks. In other words, the recent change is not simply that results have improved; the way Rakuten credit should be analyzed is itself shifting from a focus on liquidity defense to a focus on the sustainability of improvement and the success or failure of structural optimization.

4. Industry Position and Franchise Strength

Rakuten's franchise is particularly broad among Japanese digital companies with consumer touchpoints. It is rare in Japan to have an entity that connects e-commerce, travel, digital content, cards, banking, securities, payments, and telecom through a single member ID and points program, and this breadth itself functions as a barrier to entry. Looking at each business individually, there are larger players in each industry, but in terms of overall strength including membership base, cross-selling, data use, and the connection between payments, finance, and telecom, Rakuten clearly belongs to the upper tier.

The FinTech franchise is especially strong. In FY2025, Rakuten Card's shopping transaction volume expanded to JPY 26.5 trillion, Rakuten Bank's deposit balance to JPY 13.2 trillion, and Rakuten Securities' total number of general accounts to more than 13.26 million. This shows that Rakuten's financial subsidiaries are not merely ancillary functions within the group, but have independent scale and earnings power. From a credit perspective, the fact that fintech has high standalone profitability and strong customer stickiness is a major support, and it has become a core asset supporting market confidence in the overall group even while investment in mobile continues.

The Internet Services franchise also remains strong. FY2025 Internet Services revenue was JPY 1.37 trillion, and domestic e-commerce gross transaction value was JPY 6.35 trillion, with Rakuten Ichiba and Rakuten Travel maintaining stable transaction volume and earnings power. The important point here is that Rakuten's e-commerce business is not simply a venue for selling goods, but a starting point for customer lock-in that includes cards, points, bank accounts, payments, and mobile contracts. It is difficult to compare Rakuten with peers purely on a margin basis, but the value of e-commerce as an entry point into the ecosystem is very high.

By contrast, the Mobile franchise is still under development. The number of subscriptions reached 10.01 million at end-2025, and net additions are accelerating, but its competitive position in the domestic MNO market remains clearly weaker than NTT Docomo, KDDI, and SoftBank. Rakuten Mobile's strengths are low pricing, points and membership linkage, B2C acquisition capability, and its technology narrative around Open RAN, but it lags the major operators in network quality, brand maturity, enterprise base, and bundling power with fixed-line communications. Mobile should therefore be viewed as a business still in the process of strengthening its franchise, rather than as a credit support in its own right.

Overall, Rakuten's franchise strength is not based on the idea that "each business is overwhelmingly No. 1," but rather that "multiple strong businesses share a membership base and can refer customers to each other." This lowers customer acquisition costs, expands cross-sell potential, and strengthens lock-in as the links among finance, payments, and telecom deepen. Conversely, when the group owns a business requiring heavy investment, such as mobile, the entire ecosystem indirectly supports its development cost. Rakuten's franchise is strong, but it is not a fully defensive strength; it is a strength that depends on the quality of capital allocation across the group.

5. Segment Assessment

In assessing Rakuten's segments, it is useful first to define Internet Services as "a stable customer referral and earnings base," FinTech as "the core of profits and the balance sheet," and Mobile as "still the largest credit variable." These three segments are mutually complementary, but their contributions to credit quality are not the same. From the perspective of bond investors in particular, it is necessary to distinguish which businesses enhance the security of parent company debt and which businesses test market access.

Internet Services is a relatively stable cash generator comprising Rakuten Ichiba, Rakuten Travel, advertising, digital content, and overseas services. FY2025 revenue was JPY 1.37 trillion and Non-GAAP operating profit was JPY 88.9 billion, making it a core pillar of the group in absolute terms; excluding valuation gains and losses, Non-GAAP operating profit reached JPY 100.3 billion. Given the substantial transaction base of JPY 6.35 trillion in domestic e-commerce gross transaction value, as well as profit contributions from travel, advertising, and logistics improvements, this business functions sufficiently as Rakuten's base earnings source. Its credit significance lies less in rapid growth than in its ability to provide a degree of earnings support against volatility in mobile and funding.

That said, Internet Services should not be overestimated. It is not a regulated industry with stable earnings, but a group of businesses affected by consumer sentiment, advertising market conditions, logistics investment, and the competitive environment. In addition, Rakuten's e-commerce profits are optimized through integrated operations with cards and point rewards, so isolating the profitability of the standalone business can easily miss the economic reality. Even so, its credit role as the starting point for group member flows and operating cash generation is clearly positive.

FinTech is the core value of Rakuten credit itself. FY2025 FinTech revenue was JPY 975.9 billion, and Non-GAAP operating profit was JPY 199.9 billion, making it the largest profit contributor among the three segments. Rakuten Card transaction volume of JPY 26.5 trillion, Rakuten Bank deposits of JPY 13.2 trillion, and Rakuten Securities total accounts exceeding 13.26 million indicate that customer acquisition and deeper transaction relationships are progressing simultaneously. Japan's interest rate normalization was a tailwind for Rakuten Bank's margin improvement, and the expansion of NISA increased earnings opportunities for Rakuten Securities, both of which were clear supportive factors in FY2025.

At the same time, the credit contribution of FinTech requires structural reservations. From the perspective of parent company creditors, bank deposits, card receivables, and securities customer assets do not directly become repayment resources for the parent company. Rakuten Bank is a listed subsidiary in which Rakuten owns 49.26%, Rakuten Card is 14.99% owned by Mizuho Bank, and Rakuten Securities is 49% owned by Mizuho Securities through Rakuten Securities HD. Therefore, FinTech is a source of value, profits, and funding confidence, but cash upstreaming can also be constrained by regulation, minority shareholders, and joint control. From a credit perspective, these should be viewed as "strong assets, but not assets that can be used entirely freely."

Mobile remains the largest variable in Rakuten credit. FY2025 Mobile segment revenue was JPY 482.8 billion, and EBITDA turned positive at JPY 28.8 billion, but Non-GAAP operating loss still remained at JPY 161.8 billion. Rakuten Mobile on a standalone basis also recorded revenue of JPY 374.7 billion and EBITDA of JPY 12.9 billion, against a Non-GAAP operating loss of JPY 166.0 billion. This shows that the business has "started to move past the earnings trough," but also that it "still carries a heavy accounting burden." Rakuten Mobile's improvement is real, but to provide sufficient credit comfort, investors need to see not only stable positive EBITDA but also narrowing operating losses and control of the investment burden.

The assessment of mobile is made more difficult by the fact that improvement and renewed investment are occurring at the same time. Network-related capex of more than JPY 200 billion is planned for 2026, with continued base station rollout and network quality improvements. This is necessary for competitiveness, but from a credit perspective it means that "earnings improvement does not automatically turn into free cash flow improvement." Rakuten Mobile is no longer the pure value destroyer it used to be, but it has not yet become a business that returns full financial flexibility to the parent company.

Ultimately, Rakuten's segment assessment is fairly clear. Internet Services generates base earnings, FinTech forms the core of profits and value, and Mobile, while improving, remains the largest capital consumption issue. If the balance among the three does not break down, Rakuten credit will move toward stability; if mobile improvement slows and friction arises in FinTech upstreaming or reorganization, the credit view could again become highly volatile. The key point in segment analysis is not to read Rakuten as "a mobile company that has turned profitable" or "a strong fintech company," but as "a holding company with strong FinTech and Mobile still under improvement."

6. Financial Profile

Rakuten's FY2025 financial profile combines clear improvement with remaining vulnerabilities. Consolidated revenue was JPY 2,496.6 billion, up 9.5% year on year, IFRS operating profit was JPY 14.4 billion, EBITDA was JPY 435.9 billion, and Non-GAAP operating profit was JPY 106.3 billion, showing clear improvement at the operating level. Non-GAAP operating profit improved by JPY 99.2 billion year on year, mainly due to mobile earnings improvement and FinTech growth. The company has made significant progress from the phase in which "revenue was growing, but mobile losses offset everything," which had pressured Rakuten over the past several years.

However, the company remains weak at the net profit level. FY2025 net loss attributable to owners of the parent was JPY 177.9 billion, actually wider than the JPY 162.4 billion loss in FY2024. In 2024, a JPY 106.9 billion remeasurement gain associated with the accounting treatment change for AST SpaceMobile shares boosted IFRS operating profit, so year-on-year comparisons based only on operating profit require caution. Even allowing for that, the fact that FY2025 net income remained in the red is important. In Rakuten credit, investors should not take comfort from the declaration of operating profitability alone; they need to examine how much remains for the parent after interest expense, impairments, derivative valuations, depreciation, and minority interest deductions.

The scale of the balance sheet also appears strong at first glance. As of end-December 2025, consolidated total assets were JPY 28,804.4 billion, and equity attributable to owners of the parent was JPY 992.4 billion. However, because most of these total assets include the balance sheets of financial subsidiaries, they should not be equated with flexible repayment resources at the parent company. Rather, the more important point is that parent equity cannot yet be described as particularly thick, and a substantial portion of its value depends on subsidiary shares. Rakuten's financial safety is supported not by deposit-based self-reinforcement like a bank, but by a combination of group asset value and capital market confidence.

Looking at the parent company's standalone figures makes this point even clearer. For the fiscal year ended December 2025, standalone revenue was JPY 967.4 billion, operating profit was JPY 70.0 billion, and ordinary profit was JPY 26.1 billion, but the final net loss was JPY 25.8 billion. This shows that even if business profits improve at the standalone level, investment results and financial burdens remain heavy. It is risky to translate the consolidated profitability story directly into parent company repayment capacity; for holding company analysis, standalone earnings, dividend-receiving capacity, financial expenses, and refinancing terms are more directly important.

The "quality of earnings" is also particularly important in assessing Rakuten's financial profile. FinTech earnings are relatively stable and are likely to benefit from membership base expansion and interest rate normalization. By contrast, Mobile improvement is highly dependent on net subscription additions, ARPU, capex, and depreciation burden. Internet Services also has stability, but is affected by logistics, advertising, and international business volatility. Therefore, one cannot discuss earnings quality simply by looking at the total amount of consolidated profit. Rakuten's earnings have improved from before, but the composition remains a mix of "high-quality FinTech earnings" and the "pre-profitability phase of Mobile improvement."

From the standpoint of cost of capital, Rakuten is not yet fully out of pressure. Foreign currency senior bonds issued in 2024 remain expensive, with post-currency-swap costs of 7.21712% for the 2027 bonds and 6.03930% for the 2029 bonds. Re-access to the yen bond market in 2025 significantly improved funding conditions, but this reflected the recovery of domestic investor acceptance and the use of hybrids, and does not mean full normalization in global markets. As a financial profile, although earnings have improved, Rakuten has still not reached a "light financial structure that can sufficiently offset the high cost of funding."

Overall, it is appropriate to describe Rakuten's financial profile as "improving, but still in transition." Operating profit, EBITDA, and Non-GAAP profit have clearly improved, and the worst phase in mobile has passed. On the other hand, given the net loss, holding company constraints, high funding costs, and mobile investment burden, credit quality still depends substantially on a recovery in market confidence. Rakuten has moved away from financial crisis, but it cannot yet be said to have reached a stable financial profile. This intermediate state is the essence of Rakuten credit today.

7. Structural Considerations for Bondholders

The most important point for bond investors is that Rakuten is not a pure operating company, but a holding company with multiple regulated financial subsidiaries and a mobile subsidiary. Repayment sources for senior and subordinated bonds issued by the parent company ultimately depend on dividends, asset sales, intra-group fund transfers, and capital market access. Rakuten Bank, Rakuten Card, and Rakuten Securities are highly profitable assets, but each has depositors, card creditors, customer assets, regulators, and minority shareholders, meaning the parent company cannot freely extract cash. Therefore, parent company creditors are effectively structurally subordinated to the operating subsidiaries.

This structural subordination does not invalidate Rakuten Group's strengths, but it is a reason to apply a valuation discount. For example, Rakuten Bank had total assets of JPY 14.7 trillion as of end-March 2025, Rakuten Card had total assets of JPY 4.46 trillion as of end-2024, and Rakuten Securities had total assets of JPY 5.12 trillion as of end-2025. However, the parent company's ownership ratios are 49.26% in Rakuten Bank, 85.01% in Rakuten Card, and 51% in Rakuten Securities through Rakuten Securities HD, so these are not all wholly controlled. The presence of minority shareholders and the partner Mizuho Group may enhance strategic flexibility, but from the perspective of parent company creditors, it limits the freedom of value transfer and reorganization.

The fintech reorganization discussions resumed on February 25, 2026 could become a remedy for this structural issue. The company's explanation indicated a direction of integrated operations across banking, card, and securities, with progress on data integration and optimization of funding costs. If implemented in a rational form, this could be positive for parent company value through stronger coordination across the overall FinTech business and improved capital efficiency. On the other hand, there are many issues, including protection of Rakuten Bank minority shareholders, regulatory approvals, the form of Mizuho's involvement, and review of ownership ratios. Structural optimization is a potential upside factor for credit, but the execution process itself is also a new source of volatility.

The existence of subordinated bonds is also important as a structural consideration. Rakuten issued JPY 82.0 billion of domestic perpetual subordinated bonds in October 2025 and USD 550 million of USD-denominated perpetual subordinated bonds in December 2024. These are positive for senior creditors in that they secure equity credit for accounting and rating purposes while smoothing the repayment schedule, but they also show that parent company capital policy is market-dependent. In other words, Rakuten's structure combines high-quality subsidiary assets with a parent-level design that uses hybrids and external funding to supplement flexibility. Bond investors should assume this duality.

8. Capital Structure, Liquidity and Funding

In assessing Rakuten's capital structure and liquidity, it is necessary to separate "the company still has funding options" from "funding costs have returned to normal." At this stage, the former is clearly true. In July 2025, Rakuten issued two sustainability bonds totaling JPY 30.0 billion; in August 2025, it issued JPY 130.0 billion of three-year domestic unsecured bonds; and in October 2025, it issued JPY 82.0 billion of domestic perpetual subordinated bonds. In February 2026, it also announced the first-call redemption of the USD 750 million NC5 subordinated bonds issued in 2021. This indicates that Rakuten has again gained a certain level of acceptance in the domestic bond market.

Looking at the distribution of outstanding debt, Rakuten has substantially addressed the near-term maturity wall. In 2026, previously issued yen bonds of JPY 45.0 billion and JPY 20.0 billion mature, but pre-funding in 2025 has already created some headroom. In 2027, USD 1.8 billion of senior bonds mature; in 2028, JPY 160.0 billion of yen bonds mature; and in 2029, USD 2.0 billion bonds and JPY 50.0 billion of yen bonds mature. In addition, there are future call decisions on perpetual subordinated bonds. The key point is that the "immediate large maturity wall," once the biggest concern for Rakuten, has been substantially managed, while how the company handles foreign currency and senior bond refinancing from 2027 onward remains a medium-term issue.

Signals on funding costs remain mixed. Domestic yen bonds in 2025 were issued at around 2.336% to 3.260%, but the USD-denominated 2027 and 2029 bonds issued in 2024 were still expensive even after currency swaps, at 7.21712% and 6.03930%, respectively. This indicates that market access is not closed, but also that global investors had priced Rakuten's holding company risk and mobile uncertainty at a high level. Rakuten's liquidity is therefore "secured," but not "secured at fully low cost."

The company has indicated that funding for Rakuten Mobile from FY2026 onward will mainly be secured through self-funding. This is major progress, but should not be accepted at face value without scrutiny. Even if mobile is EBITDA positive, free cash flow improvement will lag as long as capex of more than JPY 200 billion continues. Self-funding means the company has moved closer to operating without relying on additional parent company interest-bearing debt; it does not mean that mobile itself has entered a stage where it can return sufficient surplus cash to the parent.

The presence of FinTech subsidiaries is also two-sided in liquidity analysis. Rakuten Bank's deposit base of JPY 13.2 trillion is positive for confidence in the overall group, but those are funds of the bank's depositors, not free cash at the parent company. The earnings power of Rakuten Card and Rakuten Securities is similar: the healthier the subsidiaries, the thicker the group value, but this is not an immediate substitute for parent company liquidity. Rakuten's liquidity case is therefore determined not by the size of bank deposits, but by whether "the parent company can maintain market access backed by high-quality subsidiaries." This is a holding company-specific funding model, different from a stable banking group.

In terms of capital policy, the continuation of no dividends and the use of hybrids are relatively creditor-friendly. In February 2026, the company again indicated that it would not pay a year-end dividend for FY2025 and would pursue capital raising that does not rely solely on interest-bearing debt in order to ensure financial soundness. This shows a stance of prioritizing balance sheet defense over shareholder returns, which is positive for credit. At the same time, however, the fact that shareholder returns still need to be restrained also indicates that full financial normalization has not yet been achieved. Rakuten's capital structure has strengthened from before, but it remains a capital structure that is operated defensively while continuing dialogue with the market.

9. Rating Agency View

Based on the latest primary sources confirmed, JCR rates Rakuten Group's long-term issuer rating at A-, outlook Stable, and short-term rating at J-1. On September 26, 2025, JCR changed the outlook from Negative to Stable, and the company also emphasized the upgrade in the domestic rating agency outlook as of Q3 2025. This indicates that mobile earnings improvement and funding stabilization have led to some improvement in the views of at least domestic rating agencies.

On the other hand, the list shown on Rakuten IR's Rating and Bond Information page — R&I BBB+, JCR A-, and S&P BB- — is explicitly dated June 21, 2023 on the page, making it difficult to use as a fully up-to-date list of current ratings. Therefore, while the latest status can be confirmed for domestic JCR, the latest long-term rating levels and outlooks for R&I and S&P cannot be fully updated based only on the primary sources confirmed in this review. This unevenness itself should be recognized in the rating section.

The important rating implication is that Rakuten is no longer viewed as "a credit that continues to deteriorate in one direction," but neither is it viewed as "a fully stabilized high-quality Japanese holding company." The move to a Stable domestic outlook is a significant step forward, but it recognizes the direction of improvement; it does not mean that mobile, holding company funding, and reorganization risks have disappeared. In my own credit judgment as well, the current improvement trend can be recognized, but a more meaningful upward revision in rating headroom would require further narrowing of Mobile operating losses, lower refinancing costs, and stabilization of the FinTech structure.

10. Credit Positioning

Rakuten's credit positioning is highly distinctive. Compared with domestic financial groups, it clearly ranks lower despite having high-quality assets such as deposits, cards, and securities, because of parent company structural subordination and the burden of the mobile business. Compared with telecom companies, the standalone scale and stability of mobile are weaker, but the presence of high-earning FinTech assets makes it stronger than a simple emerging telecom credit. Compared with internet companies, its member ecosystem and financial touchpoints are powerful, but its balance sheet is far heavier. In other words, Rakuten cannot be properly captured through any single comparison axis — banking, telecom, or e-commerce.

From a practical credit investor perspective, the closest characterization is that Rakuten is "a high-beta hybrid holding company credit that is moving out of crisis mode but remains high beta." The previous liquidity-driven concern has weakened, but sentiment can still swing significantly if mobile improvement stalls or reorganization becomes complicated. Rakuten does not have the defensiveness of domestic financial groups that continue paying stable dividends or mature telecom companies with more predictable capex, but neither is it as vulnerable as a pure speculative turnaround credit. This intermediate nature is what makes Rakuten bonds difficult, and it also creates a wide range of possible investor views.

11. Key Credit Strengths and Constraints

Rakuten's main credit strengths are, first, its unique ecosystem supported by more than 70 businesses and approximately 2.1 billion members; second, high-earning FinTech assets centered on Rakuten Card, Rakuten Bank, and Rakuten Securities; third, the stable earnings generation of Internet Services; fourth, the re-access to the domestic bond market confirmed in 2025; and fifth, Rakuten Mobile's achievement of positive full-year EBITDA. These are the reasons why Rakuten's credit quality has clearly improved compared with several years ago.

The constraints are also clear. First, parent company debt at the holding company is structurally subordinated, and the earnings of high-quality subsidiaries do not directly become repayment resources. Second, Mobile still has a substantial operating loss and a high capex burden. Third, net income remains in the red, with heavy financial expenses and cost of capital. Fourth, FinTech reorganization is an upside opportunity but also entails execution, regulatory, and minority shareholder risks. Fifth, funding has improved, but full normalization including in foreign currency markets has not yet been confirmed.

Therefore, what determines the ceiling of Rakuten's assessment is not whether it has a membership base or a brand, but "how far FinTech value can be transferred into parent company financial stability" and "whether Mobile improvement truly leads to free cash flow improvement." The strengths are real, but they have not yet fully overcome the constraints. The balance between these strengths and constraints defines the current position of Rakuten credit.

12. Downside Scenarios and Monitoring Triggers

The most realistic downside scenario is that mobile improvement slows in FY2026, and EBITDA profitability does not translate sufficiently into narrowing operating losses or FCF improvement. If net subscription additions slow, ARPU improvement stops, and investment for network quality improvements alone comes first, the parent company's funding burden will again start to look heavy. Rakuten's credit case depends not on the "start of improvement" in mobile, but on the "establishment of improvement," making this the most important scenario.

The second downside scenario is that fintech reorganization is viewed not as value creation but as an expansion of uncertainty. If concerns surface around conflicts of interest with Rakuten Bank minority shareholders, regulatory constraints, difficult coordination with Mizuho, or complexity in the reorganization structure, the market is likely to focus more on governance and execution risk than on group value. For parent company creditors in particular, what matters is whether the reorganization proceeds in a direction that clarifies the outlook for cash upstreaming, or instead makes the structure more opaque.

The third downside scenario is a renewed increase in funding costs. Rakuten showed improvement in the domestic market in 2025, but it will still need market confidence for foreign currency and senior bond refinancing from 2027 onward. If rising domestic rates, foreign exchange volatility, widening foreign currency market spreads, and reassessment of company-specific risk overlap, refinancing costs could again rise significantly. Rakuten's liquidity problem is more likely to appear first through rising funding costs than through an immediate shortage of cash on hand.

The fourth downside scenario is deterioration in the competitive environment for the FinTech business itself. Rakuten Bank is exposed to deposit competition from digital banks and megabanks; Rakuten Card to interest rates, credit costs, and revolving balance ratios; and Rakuten Securities to post-new-NISA fee competition and market volatility. Rakuten's credit depends heavily on FinTech earnings, so if FinTech slows due to economic or competitive pressures, the current structure in which "FinTech supports Mobile" would weaken. Rakuten credit must be analyzed by looking not only at mobile, but also at the quality of FinTech.

Priority monitoring items are Rakuten Mobile net subscription additions, Net ARPU, EBITDA and Non-GAAP operating loss, actual FY2026 network investment, parent and group bond issuance conditions, rating tone including JCR, the legal form and schedule of fintech reorganization, and the sustainability of profit growth at Rakuten Bank, Rakuten Card, and Rakuten Securities. In particular, because Q1 FY2026 results had not yet been released as of May 2, 2026, the next results will be very important in assessing whether mobile improvement is becoming established and what the actual trend in capital expenditure looks like.

The natural sequence for downside progression would be: first, updated figures for Mobile or FinTech fall short of expectations; next, the market begins to take a stricter view of capital costs and refinancing conditions; and then doubts spread regarding capital policy, including reorganization. Rakuten is no longer the type of credit where "funding suddenly runs out," but it is still a type of credit where "capital market conditions gradually deteriorate if confidence in the improvement story weakens." Accordingly, the key going forward is to monitor the quality of confidence more than the quantity of funds.

13. Short Summary & Conclusion

Rakuten Group is a Japanese internet, fintech, and mobile holding company centered on e-commerce, financial subsidiaries, and Rakuten Mobile. Credit quality is improving, supported by domestic market access, mobile EBITDA improvement, and valuable FinTech assets. At the same time, it remains a high-beta credit constrained by holding company structural subordination, mobile losses and capex, net losses, refinancing costs, and FinTech reorganization. The direction would improve if mobile improvement translated into free cash flow, refinancing costs declined, and the FinTech reorganization clarified the parent company's cash access. Investors should view Rakuten not as a stable Japanese financial or telecom bond, but as a hybrid holding company credit with a strong turnaround element.

14. Sources

Key confirmed sources:

Items not confirmed or requiring additional confirmation: