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

May 14,2020

KDDI Corporation

At the Board of Directors meeting held on May 14, 2020, KDDI resolved to take over the UQ mobile Business (the 'Business') of UQ Communications Inc. ('UQ Communications') through a corporate split (the 'Company Split') with a planned effective date of October 1, 2020, on condition of acquiring the approval of the relevant authorities.
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

The telecommunications market is changing at a speed and on a scale that is unprecedented due in part to evolving technologies, growing customer needs, and emerging competitors. Amid this environment, the KDDI Group will continue aiming to further enhance corporate value and provide new experience value to customers by promoting the 'integration of telecommunications and life design.'
KDDI's vision is to deliver a thrilling customer experience by always going further than expected with the ultimate goal of achieving a truly connected society. In line with this vision, the Company will integrate UQ mobile-which has garnered 2,000,000 contract customers by offering low prices and high-quality services-thereby consolidating the Group's management resources with the aim of making its business structure more efficient and enhancing its service competitiveness and sales system. In addition, KDDI will continue striving to provide dynamic services attuned to the market environment and customer needs. Moreover, KDDI will maintain both the 'au' and 'UQ mobile' brands for its telecommunication services.
Going forward, UQ Communications will leverage the business base it has cultivated since it began providing WiMAX services in 2009 to continue creating new experience value in the broadband market in line with its vision of refining 'connection' to provide a mobile internet service that goes beyond satisfaction.
KDDI and UQ Communications will continue exploring and promoting business synergy that uses their customer bases and advanced technologies like 5G.

2. Summary of the Company Split

3. Policy on the calculation of the Allocation related to the Company Split

Regarding the calculation of the cash to be issued as a provision for the Company Split, the business value was decided through discussions and negotiations with UQ Communications that took into consideration the operating results trends of the Business (revenues, expenses, profit, and cash flows) in addition to the value of the assets, liabilities, and total equity to be absorbed. Furthermore, although the impact on KDDI's consolidated operating results will be minor in the short term, it is expected to enhance revenues over the medium to long term.

4. Outline of the Companies Involved in the Company Split

Splitting Company	Succeeding Company
(1) Name	UQ Communications Inc.	KDDI Corporation
(2) Location of the Head Office	2-16-1 Konan, Minato-ku, Tokyo	2-3-2 Nishi-shinjuku, Shinjuku-ku, Tokyo
(3) Name and Title of the Representative	Hiroshi Takezawa, President	Makoto Takahashi, President
(4) Summary of Business	Telecommunications business	Telecommunications business
(5) Stated Capital	71,425 million yen	141,852 million yen
(6) Date of Establishment	August 29, 2007	June 1, 1984
(7) Number of Issued Shares	1,000,950 shares	2,355,373,600 shares
(8) Fiscal Year-End	March 31	March 31
(9) Major Shareholders and Shareholding Ratio	KDDI Corporation 32.26% East Japan Railway Company 17.65% KYOCERA Corporation 17.65%	KYOCERA Corporation 14.22% Toyota Motor Corporation 12.67% The Master Trust Bank of Japan, Ltd. (trust account) 9.43% Japan Trustee Services Bank, Ltd. (trust account) 5.55%

(10) Financial Condition and Business Results for the Latest Year

KDDI Corporation (International Financial Reporting Standards) (consolidated)
Fiscal Term	Fiscal year ended March 2020
Equity attributable to owners of the parent (million yen)	4,384,424
Total assets (million yen)	9,580,149
Equity per share attributable to owners of the parent (yen)	1,906.35
Operating revenue (million yen)	5,237,221
Operating income (million yen)	1,025,237
Profit for the year before income tax (million yen)	1,020,699
Profit for the year attributable to owners of the parent (million yen)	639,767
Basic earnings per share (yen)	275.69

UQ Communications Inc. (Japanese GAAP) (non-consolidated)
Fiscal Term	Fiscal year ended March 2020
Total equity (million yen)	179,300
Total assets (million yen)	297,705
Equity per share (yen)	153,431.43
Operating revenue (million yen)	319,423
Operating income (million yen)	14,124
Ordinary income (million yen)	13,997
Profit for the year (million yen)	9,472
Earnings per share (yen)	21,586.65

5. Outline of the Succeeding Business Sectors

6. Status after the Company Split

There is no change in the name, location, position or name of the representative, business, stated capital, or fiscal term of the Company following the Company Split.

7. Future Outlook

The impact on consolidated operating results in the fiscal year ending March 31, 2021, will be minor, but it is expected to enhance revenues over the medium to long term.