Announcement Regarding the Company Split (Simplified Absorption-Type Company Split) with Consolidated Subsidiaries

January 13,2023

KDDI Corporation

At the Board of Directors meeting held on January 13, 2023, KDDI decided to transfer the au One Net business of "au HIKARI" Mansion in the Chubu area operated by KDDI to Chubu Telecommunications Co., Ltd. ("ctc"), our consolidated subsidiary through an absorption-type split ("Company Split"), and we plan to conclude an absorption-type split agreement with ctc on February 3, 2023.
A portion of the disclosure-related matters and content have been omitted because it is a simplified absorption-type company split where the business will be split off into wholly owned subsidiaries of KDDI.

• Note:

  The applicable area is Aichi, Gifu, and Shizuoka prefectures.

1. Purpose of the Company Split

In 2003, we launched our FTTH business for customers living in condominiums; and for the past 20 years, we have expanded our services for detached houses, expanded our service areas, and increased the speed and added value of our services to meet customer needs. Many customers continue to use au HIKARI, and the number of FTTH service subscriptions for the entire KDDI Group is 5.09 million. In the Chubu region, we acquired ctc as the subsidiary in 2008, and have been expanding our business in the region. In December 2021, our FTTH service "Commufa-hikari" exceeded 1 million subscriptions.

By transferring this business to ctc, through this company split, we will focus the Group's FTTH business in the Chubu region on ctc, improve services to customers, and establish a structure that can immediately respond to the needs of customers with close ties to the region. This will enable the Group as a whole to continue to grow our FTTH business.

• Note:

  The number of FTTH service subscription of the Group is the data as of the end of September 2022 in the Personal Services segment.

2. Summary of the Company Split

• (1)

  Schedule of the Company Split

  • Date of resolution by the board of directors of KDDI:

    January 13, 2023

  • Date of resolution by the board of directors of ctc:

    January 13, 2023

  • Date of execution of the Company Split agreement:

    February 3, 2023 (scheduled date)

  • Date of Company Split (effective date):

    April 1, 2023 (scheduled date)

  • • Note:

      As this company split is a simplified company split as stipulated in Article 784, Paragraph 2 of the Companies Act, the split company will not hold a general meeting of shareholders to approve the split agreement.

• (2)

  Method of the Company Split

  This is an absorption-type split with KDDI as the company to be split and ctc as the company absorbing the operations to be split off.

• (3)

  Details of the Allocation Relating to the Company Split

  KDDI will receive 48,732 shares of ctc's common stock as consideration for the company split from ctc.

• (4)

  Treatment Regarding Share Options and Bonds with Share Options Associated with the Company Split

  KDDI has not issued any share options or bonds with share options.

• (5)

  Stated Capital Increased or Decreased Due to the Company Split

  There will be no increase or decrease in the Company's stated capital due to the Company Split.

• (6)

  Rights and Obligations Succeeded to by the Succeeding Companies

  Upon the Company Split, ctc will succeed to some of KDDI's business in the au one net of "au HIKARI" Mansion in Chubu area; and ctc will succeed to what is defined in the absorption-type company split agreement among the assets, liabilities, and other rights, obligations, and contractual statuses retained by KDDI and related to this development business as of the end of the day before the effective date of the company split.

• (7)

  Prospect of Fulfillment of Obligations

  We have determined that there will be no impediment to the fulfillment of obligations payable by ctc, on or after the effective date of the Company Split.

3. Approach to the Calculation of the Allotment of Shares in Relation to the Company Split

The calculation of the shares to be delivered to us by ctc in the Company Split was based on the ctc's equity value after considering performance trends such as revenues, expenses, profits, and cash flow - and other factors - in addition to the results of the calculation of the value of the business. The decision was made after discussion and negotiation with ctc. No significant increase or decrease in profit is expected in the business forecast, which is the premise for the calculation. Although the impact of the transaction on consolidated business performance is expected to be minimal at this time, we expect it to contribute to earnings growth over the medium to long term.

4. Outline of the Companies Involved in the Company Split (as of March 31, 2022)

(10) Financial Condition and Business Results for the Previous Consolidated Fiscal Year and the Previous Business Year

5. Outline of the Splitting Business Sectors

• (1)

  Details of Business of the Splitting Sectors

  The au one net business of "au HIKARI" Mansion in Chubu area

• (2)

  Business Results of the Splitting Sectors

  Operating revenue 1,653 million yen

• (3)

  Items and Book Values of the Splitting Assets and Liabilities

  Not applicable as only the contractual status related to the business will be succeeded.

6. Status After the Company Split

After the Company Split, there will be no change in the name, head office location, position or name of the representative, business, stated capital, or fiscal term of KDDI, ctc, as a result of the Company Split.

7. Future Outlook

The impact of the Company Split on KDDI's consolidated operating results will be minor because it is a corporate split in which KDDI and its wholly owned subsidiaries form business companies.

• 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.

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