Notice of Establishment of Joint Venture in Singapore via Third-Party Capital Allocation

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July 16,2014

KDDI Corporation
Sumitomo Corporation

KDDI Corporation ("KDDI") and Sumitomo Corporation hereby provide notice of their agreement, reached today, to establish a joint venture company (the "Joint Venture") in the Republic of Singapore ("Singapore") to jointly conduct telecommunications business in the Republic of the Union of Myanmar ("Myanmar").

1. Objective in Establishing the Joint Venture

Myanmar is currently undergoing rapid democratization and deregulation, and the country is expected to experience significant growth going forward.
KDDI has concluded an agreement with Myanma Posts & Telecommunications to jointly conduct telecommunications business (the "Joint Operation") in the country. To this end, KDDI has set up a Joint Venture with Sumitomo Corporation in Singapore. This Joint Venture then established a subsidiary in Myanmar (the "Myanmar Subsidiary") through which to conduct the Joint Operation. Specifically, KDDI and Sumitomo Corporation have concluded an agreement (the "Joint Venture Agreement") related to investment in and operation of the Joint Venture. Under the Joint Venture Agreement, a wholly owned KDDI subsidiary located in Singapore will increase its capital via third-party allocation to be undertaken by KDDI and Sumitomo Corporation (defined in "3." below). Sumitomo Corporation's investment in the Joint Venture is subject to approval by local authorities under the antitrust laws of the related countries.
KDDI will leverage the experience and technical capabilities it has cultivated as a mobile telecommunications operator in Japan and overseas, and Sumitomo Corporation aims to take advantage of expertise gained through trading with Myanmar and as a mobile telecommunications operator overseas. Together, the two companies intend to contribute to Myanmar's development in the field of information and telecommunication technology (ICT) and expand their global business.

2. Overview of KDDI's Wholly Owned Subsidiary in Singapore

(1) Name KDDI SUMMIT GLOBAL SINGAPORE PTE. LTD.
(2) Location 105 CECIL STREET#13-01 OCTAGON, THE SINGAPORE (069534)
(3) Names and roles of representatives Naohiko Ota, director
Tetsuya Shibasaki, director
(4) Businesses Provision of telecommunications business in Myanmar through Myanmar Subsidiary
(5) Capital US$10 million
  • Note:
    The company was established with capital of US$100, but KDDI increased its investment in the company on May 2, 2014.
(6) Established April 25, 2014
(7) Ownership KDDI 100%

3. Overview of the Joint Venture Following the Capital Increase through Third-Party Allocation by KDDI and Sumitomo Corporation (Provisional)

(1) Name KDDI SUMMIT GLOBAL SINGAPORE PTE. LTD.
(2) Location 105 CECIL STREET#13-01 OCTAGON, THE SINGAPORE (069534)
(3) Names and roles of representatives Naohiko Ota, director (provisional)
(4) Businesses Provision of telecommunications business in Myanmar through Myanmar Subsidiary
(5) Capital US$500 million
  • Note:
    The capital increase is slated to occur in stages. First, KDDI will add US$240.5 million, then Sumitomo Corporation will invest US$249.5 million, and then the two companies will undertake a capital increase through third-party allocation (the "Capital Increase through Third-Party Allocation").
(6) Ownership KDDI 50.1%
Sumitomo Corporation 49.9%

4. Overview of the Subsidiary in Myanmar (Provisional)

(1) Name KDDI Summit Global Myanmar Co., Ltd.
(2) Location No.37, La Pyayt Wun Plaza 10th Floor, Alan Pya Pagoda Road, Dagon Township, Yangon
(3) Names and roles of representatives Takashi Nagashima, managing director
(4) Businesses Provision of telecommunications business in Myanmar
(5) Capital US$75,000
  • Note:
    The capital of the Joint Venture is scheduled to increase in stages.
(6) Established June 16, 2014
(7) Ownership The Joint Venture 99.9%
  • Note:
    KDDI's wholly owned subsidiary in Myanmar, KDDI Myanmar Co., Ltd., is scheduled to own 1 share.

5. Overview of Entity Undertaking Capital Increase for the Joint Venture (KDDI)

(1) Name KDDI Corporation
(2) Location 3-2, Nishi Shinjuku 2-chome, Shinjuku-ku, Tokyo, Japan
(3) Names and roles of representatives Takashi Tanaka, president
(4) Businesses Telecommunications business
(5) Capital ¥141,851 million (as of March 31, 2014)
(6) Established June 1, 1984
(7) Net assets ¥2,711,573 million (as of March 31, 2014)
(8) Total assets ¥4,014,992 million (as of March 31, 2014)
(9) Major shareholders and percentage ownership
Kyocera Corporation 13.71%
Toyota Motor Corporation 11.91%
The Master Trust Bank of Japan, Ltd. (trust account) 5.76%

(as of March 31, 2014)

  • Note:
    KDDI holds 61,984,948 of its own shares, but is not indicated as a major shareholder, nor are its holdings including in the calculation of percentage ownership by major shareholders.
(10) Relationship between Sumitomo Corporation and KDDI Capital relationships No capital relationships requiring mention exist between Sumitomo Corporation and KDDI. However, KDDI is a major shareholder (50% ownership) in Jupiter Telecommunications Co., Ltd. ("J:COM"), in which Sumitomo Corporation holds a 50% stake.
Personal relationships No personal relationships requiring mention exist between Sumitomo Corporation and KDDI. However, KDDI has dispatched three directors and one corporate auditor to J:COM. KDDI also seconds employees to J:COM.
Transactional relationships No transactional relationships requiring mention exist between Sumitomo Corporation and KDDI. Furthermore, no transactional relationships requiring special note exist between people or companies affiliated with Sumitomo Corporation and people or companies affiliated with KDDI.
Status of relationships with related parties KDDI does not correspond to a related party of Sumitomo Corporation. However, J:COM is a related party of KDDI.

6. Overview of Entity Undertaking Capital Increase for the Joint Venture (Sumitomo Corporation)

(1) Name Sumitomo Corporation
(2) Location 8-11, Harumi 1-chome, Chuo-ku, Tokyo, Japan
(3) Names and roles of representatives Kuniharu Nakamura, president & CEO
(4) Businesses With its global network and trust from companies and consumers in various industries, Sumitomo Corporation engages in multifaceted business activities by making the most of its Integrated Corporate Strength. These business activities include sales of a variety of products and services within Japan, import and export, trilateral trade, and domestic and international business investment.
(5) Capital ¥219,279 million (as of March 31, 2014)
(6) Established December 24, 1919
(7) Net assets ¥2,540,184 million (as of March 31, 2014)
(8) Total assets ¥8,668,738 million (as of March 31, 2014)
(9) Major shareholders and percentage ownership
The Master Trust Bank of Japan, Ltd. (trust account) 5.95%
Japan Trustee Services Bank, Ltd. (trust account) 4.70%
LIBERTY PROGRAMMING JAPAN, INC. 3.66%

(Standing proxy: JP Morgan Securities)
(as of March 31, 2014)
(10) Relationship between KDDI and Sumitomo Corporation Capital relationships No capital relationships requiring mention exist between KDDI and Sumitomo Corporation. However, Sumitomo Corporation is a major shareholder (50% ownership) in Jupiter Telecommunications Co., Ltd. ("J:COM"), in which KDDI holds a 50% stake.
Personal relationships No personal relationships requiring mention exist between KDDI and Sumitomo Corporation. However, Sumitomo Corporation has dispatched three directors and two corporate auditors to J:COM. Sumitomo Corporation also seconds employees to J:COM.
Transactional relationships No transactional relationships requiring mention exist between KDDI and Sumitomo Corporation. Furthermore, no transactional relationships requiring special note exist between people or companies affiliated with KDDI and people or companies affiliated with Sumitomo Corporation.
Status of relationships with related parties Sumitomo Corporation does correspond to a related party of KDDI. However, J:COM is a related party of Sumitomo Corporation.

7. Schedule

(1) KDDI Board of Directors meeting July 16, 2014
(2) Conclusion of the Joint Venture Agreement July 16, 2014
(3) Capital Increase through Third-Party Allocation Around August 2014 (expected)
  • Note:
    The additional investment by Sumitomo Corporation is subject to approval by the related authorities.
(4) Start of business Around August 2014 (expected)

8. Future Expectations

Both KDDI and Sumitomo Corporation expect any impact on their own consolidated operating performance during the fiscal year ending March 31, 2015, of establishing the Joint Venture to be slight.

  • The information contained in the articles is current at the time of publication.
    Products, service fees, service content and specifications, contact information, and other details are subject to change without notice.