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

August 1,2023

KDDI Corporation

At the Board of Directors meeting held on July 28, 2023, KDDI decided to transfer the cable TV-related businesses to JCOM Co., Ltd. ("JCOM"), a consolidated subsidiary, through an absorption-type split ("Company Split") with a planned effective date of January 1, 2024, and concluded an absorption-type split agreement with JCOM.
A portion of the disclosure-related matters and content have been omitted because the impact of the Company Split on KDDI's total assets is expected to amount to less than 10% of its total equity as of the close of the previous fiscal year and the effect on its operating revenue is expected to amount to less than 3% of the previous fiscal year's operating revenue.

1. Purpose of the Company Split

Established in 1995, JCOM has been a subsidiary of the KDDI Group since 2013 and is Japan's largest multi-system operator of cable TV services and programing. There are 11 companies and 65 channels under JCOM's umbrella, through which it provides cable TV, high-speed internet, telephone and other services to 5.63 million customers across Japan. The company also utilizes its services and assets to provide solution services to cable TV operators in Japan.
In 2005, KDDI began partnering with cable TV operators, and currently provides telephone service to 6.3 million cable TV customers in addition to furnishing 1.4 million cable TV set-top boxes, thereby offering services that suit the needs of customers who use cable TV.
As a result of the Company Split, the services and assets of JCOM's cable TV business will be offered through the collaborative relationships KDDI cultivated with nationwide cable TV operators, and JCOM will offer KDDI's corporate solution services to local governments and other entities in partnership with other cable TV operators moving forward. This arrangement will contribute to the further development of the cable TV industry and the co-creation of local communities with the aim of improving customer service rooted in these communities.
Although the Company expects to receive shares of JCOM common stock as consideration for the Company Split, the same number of shares of JCOM common stock will be simultaneously issued to Sumitomo Corporation when the split occurs by way of a third-party allocation. Thus, the ratio of voting rights in JCOM held by KDDI and Sumitomo Corporation will remain the same.

2. Summary of the Company Split

• (1)

  Schedule of the Company Split

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

    July 27, 2023

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

    July 28, 2023

  • Date of execution of the Company Split agreement:

    July 28, 2023

  • Date of Company Split (effective date):

    January 1, 2024 (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 a simplified absorption-type split with KDDI as a splitting company and JCOM as a succeeding company.

• (3)

  Details of the Allocation relating to the Company Split

  KDDI will receive 74,860 shares of JCOM's common stock as consideration for the Company Split from JCOM.

• (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 KDDI's stated capital due to the Company Split.

• (6)

  Rights and Obligations to be Succeeded by the Succeeding Company

  In conjunction with the Company Split, JCOM will succeed the cable TV-related businesses operated by KDDI along with the assets, debts, and other rights, obligations, and status under contracts that KDDI holds in relation to these businesses as of the day before the effective date of the Company Split, as defined in the absorption-type company split agreement.

• (7)

  Prospect of Fulfillment of Obligations

  We have determined that there will be no impediment to the fulfillment of obligations payable by JCOM, 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 KDDI by JCOM in the Company Split was based on JCOM's equity value after considering performance trends, such as revenues, expenses, profits, 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 JCOM. 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, 2023)

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

5. Outline of the Splitting Business Sector

• (1)

  Details of Business of the Splitting Sector

  Cable TV-related businesses

• (2)

  Business Results of the Splitting Sector

  Operating revenue: 72.7 billion yen

• (3)

  Items and Book Values of the Splitting Assets and Liabilities (million yen)

  Assets		Liabilities
  Item	Book value	Item	Book value
  Assets	16,004	Liabilities	8,900

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 or JCOM 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 betweenKDDI and its consolidated subsidiary.

Reference: Forecast of financial results for the current fiscal year and financial results for the previous fiscal year (million yen)

• 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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