Photo/IllutrationThe Asahi Shimbun

Rakuten Inc. and KDDI Corp. have agreed to share their telecommunications and payments services, adding momentum to the e-commerce giant's entry into the mobile phone business next year.

As Rakuten plans to offer nearly half the rates of the three established carriers, the move is already prompting industry leader NTT Docomo Inc. to respond.

Under the agreement, Rakuten will rent KDDI's rural networks when it enters the business in October 2019 to reduce initial investments, it was announced Nov. 1.

KDDI, operator of the au service, will utilize Rakuten's infrastructure for smartphone payments and logistics.

Rakuten will use its own networks in Tokyo's 23 wards, Osaka, Nagoya and other urban areas. It plans to build its own networks in rural areas by March 2026.

As the tie-up will allow Rakuten to offer the high-speed LTE service nationwide from the outset, the move could spur a price war with major carriers including Softbank Corp. and KDDI.

The "Rakuten effect" has already been seen, as Docomo announced on Oct. 31 that it will reduce its telecommunication fees by 20 to 40 percent around April to June. The company said it will translate into up to 400 billion yen ($3.54 billion) in annual savings for subscribers.

Docomo President Kazuhiro Yoshizawa said, “As a newcomer is entering the industry, improving competitiveness in advance allows us to strengthen our customer base.”

KDDI President Makoto Takahashi also said KDDI is considering lowering fees to compete despite the company renting its rural networks to Rakuten in the initial stage.

Takahashi, however, said the company already cut telecommunication fees last summer.

“We have no intention to reduce fees by an additional 400 billion yen at this point,” he said.

A Softbank public relations official said: “We are always considering the fees in light of the competitive environment, consumer needs and other factors. We will continue reviewing the fees."

(This article was written by Fumiko Kuribayashi and Shinya Tokushima.)