Rakuten to acquire open RAN vendor Altiostar

After its early investment and collaboration, Rakuten on Wednesday announced plans to acquire Altiostar Networks in a deal that pegs total value of the U.S.-based open RAN vendor at $1 billion.

Rakuten was already an Altiostar investor, alongside Telefónica, Qualcomm, Cisco and others. Now the company is set to come under the larger Rakuten umbrella as an indirect wholly-owned subsidiary with the purchase of remaining Altiostar shares by Rakuten USA.

Altiostar is focused on virtualized open RAN software for 4G and 5G, with network functions incorporated in the Rakuten Communications Platform (RCP). It’s also a key vendor deployed in the mobile operator’s greenfield 4G and 5G network in Japan, which Rakuten touted as the world’s first fully virtualized could-native open RAN network, initially launched in April 2020.

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Altiostar’s Ashraf Dahod is staying on as CEO, while also taking on a role at Rakuten’s global RCP organization. The open RAN player will continue to operate out of its U.S. headquarters in Tewksbury, Massachusetts.

Notably, Altiostar’s suite of open virtualized network functions are on the RCP. It’s a platform that incorporates vendors and learnings from Rakuten’s own virtualization and open RAN deployments. Rakuten is working to export RCP globally as an easier and cost-effective blueprint or toolkit for mobile operators that want to deploy their own 4G or 5G virtualized networks based on open RAN principals. Ligado Networks signed on in the U.S. to use Rakuten’s RCP to serve the enterprise segment.  

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“We’re entering a new era where mobile network operators can choose how to build and deploy a network by working with the world’s most innovative software companies to create open and interoperable solutions,” said Rakuten Group CEO Mickey Mikitani in a statement. “We’re delighted to welcome the Altiostar team to the Rakuten family as we share a common passion for empowering mobile networks through disruptive innovation, offering mobile operators around the world secure, cost-effective and highly agile technology.”

Technology research and analysis firm J. Gold Associates thinks the Altiostar acquisition bodes well for Rakuten’s RCP ambitions.

“We believe this acquisition by Rakuten is a major step forward in making it a leading platform play for virtualized and open RAN in 5G and beyond and will accelerate its ability to offer RCP as a compelling solution to next generation open networking,” wrote the firm in a Wednesday analysis.

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By acquiring Altiostar, Rakuten can provide the company with more operating capital and is better positioned to guide the direction and extent of R&D efforts, J. Gold added.

“It also provides Rakuten with a reduced cost of operations (as it is now essentially paying itself for key software components) as well as a revenue stream from Altiostar provided solutions for other network operators and a bump in the ability to sell RCP,” the firm wrote.

In addition to Rakuten, Altiostar is a vendor for other mobile operators including Dish Network in the U.S., Bharti Airtel in India, and Telefonica in Europe and Latin America.

RELATED: Telefonica’s O2 trials open RAN with NEC using Altiostar software

“Open RAN architecture and virtualization are key to building software-centric networks that can scale and adapt to meet an explosion of devices and applications driving service velocity and profits,” said Altiostar’s Dahod in a statement. “Becoming a Rakuten Group company will allow us to build on our foundation and accelerate our technology development to help operators to innovate, explore new business models and bring affordable broadband to the masses through web-scale mobile networks.”

Today Rakuten also launched a new business organization Rakuten Symphony, bringing together international telco products, open RAN software, and the Rakuten Communications Platform (RCP).

“Rakuten Symphony’s vision is to provide a future-proven, cost-effective cloud connectivity platform,” the company stated, with the aim of leading adoption of cloud-native open RAN infrastructure and services.