Rakuten and AST SpaceMobile form 51/49 joint venture for Japan's 148 billion yen satellite network

Japan's communications ministry has spent much of the past year assembling a funding structure designed to put a satellite constellation of its own behind the country's mobile networks. On November 6, 2026, Japan Standard Time, Rakuten Group and AST SpaceMobile (NASDAQ: ASTS) agreed to establish Rakuten AST, Inc., a joint venture that will build a direct-to-device network using low Earth orbit satellites to reach commercially available smartphones. The companies announced the agreement on November 9, 2026, and said the venture is expected to receive up to 148 billion yen, about 1 billion US dollars, over roughly three years.

Direct-to-device service is the industry term for a radio link between an ordinary smartphone and a satellite overhead, with no dish, no external antenna and no modified handset. The idea has moved from demonstration to procurement over the past several years, and AST SpaceMobile has positioned itself as one of its most visible suppliers. The company says it holds roughly 3,900 patents and builds satellites around a phased array of about 223 square meters, a surface area that lets a low Earth orbit craft concentrate enough signal on a handset to close a link. Its Block 1 BlueBird satellite has recorded a peak downlink of 98.9 Mbps to unmodified phones.

Japan's route into that architecture runs through a program called J-LEO, administered by the Ministry of Internal Affairs and Communications. The ministry selected the joint proposal submitted by Rakuten's preparatory company and Rakuten Mobile, and money is expected to reach the venture through the Communications and Information Network Association of Japan, the fund administrator. J-LEO is intended in part to guarantee connectivity during emergencies by creating emergency inter-carrier roaming among mobile operators, so that a subscriber on one network can still reach a satellite when terrestrial towers lose power or backhaul.

The funding line predates the joint venture. Reuters reported on June 30 that the Japanese government would grant up to 148 billion yen, or $912 million, to Rakuten Group to help build a satellite communications network, a decision taken by the industry group that administers the money. Under subsidy rules published by that association in early July 2026, the maximum subsidy is 148 billion yen and government support is capped at 50 percent of eligible pre-tax project costs, which means a fully drawn grant implies an eligible budget of roughly 296 billion yen. Eligible expenses range from satellites and ground antenna components to launch services, launch insurance and initial satellite testing. The November announcement routes that ceiling to the new venture.

Key Facts

Rakuten Group reported on November 9 that the venture's registered head office will be at 1-14-1 Tamagawa, Setagaya-ku, Tokyo, with legal capital of 100 million yen and voting rights split 51 percent to Rakuten Group and 49 percent to AST SpaceMobile Japan Holdings II GK. The representative will be Ryoji Osaka, and establishment is planned for November 2026. The business covers satellite procurement and network operation.

The headline number is 148 billion yen, or about 1 billion US dollars, expected over roughly three years and disbursed through the Communications and Information Network Association of Japan. The operating deadline is the end of March 2029, when the venture aims to begin domestic service. Reuters valued the same 148 billion yen ceiling at about $912 million in its June report, using exchange rates then in force, against the approximately 1 billion dollar figure in the November company announcement. The gap reflects currency movement, not a change in the award.

AST SpaceMobile will manufacture and supply the satellites. TelecomTV reported on November 9 that the project is intended to use the largest communication satellites ever deployed in low Earth orbit, and that the venture will run a non-terrestrial network managed and operated in Japan, with base-station equipment on the ground so Japanese carriers can manage traffic flexibly.

SatNews reported on November 11 that the network will operate across commercial mid-band spectrum, carrying video streaming, voice calls and social media without modifications or extra hardware on consumer handsets. The same account describes AI edge computing for automated spectrum management, higher speeds and internet of things use cases.

On the supply side, AST SpaceMobile brings roughly 3,900 patents, next-generation satellites built around a phased array of about 223 square meters. The company says it holds about 60 mobile network operator agreements covering over 3 billion subscribers. Mickey Mikitani, Rakuten Group chairman and chief executive, called the project a key pillar of Rakuten Mobile's network strategy. Abel Avellan, AST SpaceMobile's founder and chief executive, said it validates space-based cellular broadband as a complement to terrestrial wireless.

Analysis

What this really means is that Japan is buying the ground segment and the operating rights, not the satellites. AST SpaceMobile supplies the hardware and holds 49 percent of the voting rights, while Rakuten Group holds 51 percent and the base-station equipment sits in domestic infrastructure under Japanese management. The ministry chose the proposal, the industry association disburses the money, and the venture is incorporated in Tokyo with a Japanese representative. Sovereignty in this arrangement is a matter of who controls traffic and who can be told to prioritize a prefecture during a disaster, not a matter of who bends the metal.

The bigger picture here is that the 50 percent cost cap turns a headline grant into a much larger capital commitment. If the full 148 billion yen is drawn, the eligible project budget implied by the rules is roughly 296 billion yen, and the remainder has to come from the venture and its parents. That structure gives the government leverage over milestones and gives the companies a strong incentive to keep eligible spending documented and on schedule. It also means the widely quoted 148 billion yen is half a story: the real program is about twice the subsidy.

The emergency roaming requirement is the part that changes market behavior rather than just technology. J-LEO is designed so that a subscriber on one network can reach a satellite when terrestrial service fails, which obliges competing operators to cooperate on a shared fallback layer. A neutral wholesale venture is one way to make that palatable, because no single carrier owns the only path to the sky.

The schedule is the most exposed element. Rakuten Mobile plans commercial-environment testing of satellite-to-mobile service within 2026, and the venture targets domestic operations by the end of March 2029. Between those two points sit satellite deliveries, spectrum coordination, ground segment integration and the regulatory acceptance of a service that carriers will advertise to ordinary customers. Programs of this kind rarely fail at the demonstration stage, since a single working link is enough for a headline. They slip where certification, capacity and handset interoperability meet.

Why It Matters

Japan sits on fault lines and typhoon tracks, and its mobile resilience planning assumes that towers, power and fiber backhaul can fail together. A direct-to-device layer does not replace terrestrial networks, but it gives carriers a fallback that does not depend on the same civil infrastructure. The J-LEO requirement for inter-carrier emergency roaming makes that fallback a public obligation rather than a premium feature, which is the difference between a marketing claim and a disaster plan.

The deal also anchors an allied supply chain. The venture builds on ties established when the United States and Japan designated AST SpaceMobile and Rakuten infrastructure under a bilateral technology accord, and it expands on field trials after AST began direct-to-cellular operations in Japan. For Tokyo, that is industrial policy as much as telecom policy: the constellation is foreign-built, but the operating entity, the ground equipment and the traffic control are domestic, and the funding flows through a Japanese administrator.

For the market, the venture creates a wholesale layer that sits above three competing mobile networks. Coverage that no single operator could justify building alone becomes a shared input, and the emergency roaming rule gives every operator a reason to connect to it. If the model works, it becomes a template for how smaller and mid-sized countries buy satellite resilience without owning a launch industry.

Next Up

The immediate step is incorporation in November 2026, followed by commercial-environment testing of satellite-to-mobile service within the year. Satellite deliveries from AST SpaceMobile, integration of ground base stations with Rakuten Mobile's network, and spectrum work with Japanese regulators will then determine whether domestic service can start by the end of March 2029. Beyond that date, the venture intends to work with AST to offer the service worldwide, subject to regulatory approval in each market.

Three things are worth watching. The first is how much of the 148 billion yen is actually drawn, since the 50 percent cap means every public yen has to be matched. The second is whether the emergency roaming arrangement extends to all domestic operators on terms their engineers accept. The third is timing: a 2026 test and a 2029 service date leave little slack, and the venture's credibility will rest on satellite deliveries that neither Rakuten nor the ministry controls directly.