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

[Translation]

December 12, 2019

KDDI Corporation

Announcement Regarding the Company Split (Simplified Absorption-Type Company Split)

with a Consolidated Subsidiary

KDDI Corporation announces the decision at the Board of Directors' meeting held on December 12, 2019, to have LDEX Preparatory Company, Inc. ("LDEX"), a consolidated subsidiary of KDDI (100% subsidiary), succeed (the "Company Split") through an absorption-type split the business (collectively, the "Business") involved in the planning and operation of Video Pass (a flat-fee and pay-as-you-go video streaming service), one of the video streaming businesses operated by KDDI, subject to receiving approval and authorization from the relevant authorities with an effective date of March 2, 2020 (planned), and an absorption-type split agreement scheduled to be signed with LDEX on January 7, 2020. Furthermore, KDDI and TV Asahi Corporation ("TV Asahi") agreed to transfer half of the LDEX shares from KDDI to TV Asahi on March 2, 2020 (planned), and jointly operate LDEX through both companies.

Because the Company Split is a simplified absorption-type company split in which the Business is succeeded by a 100% subsidiary of KDDI, this matter is being disclosed while partially omitting some disclosure items and details.

1. Purpose of the Company Split

In anticipation of favorable changes in the business environment for video streaming due to the coming proliferation of 5G, KDDI and TV Asahi will use LDEX to combine their assets such as KDDI's cutting-edge technologies including 5G, video drawing technology, and customer base as well as TV Asahi's distinctive video content centered around terrestrial programs and customer appeal beginning with terrestrial broadcasts to provide a new video viewing experience with an unprecedented level of service loyalty to customers.

In addition, the new company will undertake the market expansion of new forms of content which utilize telecommunications, digital advertising, and cutting-edge technologies.

Furthermore, the name of the service which is scheduled to be provided by LDEX and the details of the video streaming service will be announced as they are decided.

2. Summary of the Company Split
(1) Schedule of the Company Split
Date of resolution by the board of directors of the Company:	December 12, 2019
Date of resolution by the board of directors
of LDEX Preparatory Company, Inc.:	January 7, 2020 (to be fixed)
Date of execution of the company split agreement:	January 7, 2020 (to be fixed)
Date of company split (effective date):	March 2, 2020 (to be fixed)

(Note) Because the Company Split consists of both a simplified company split as provided in Article 784, paragraph (2) of the Companies Act for the Company, which is the splitting company, and a summary company split as provided in Article 796, paragraph (1) of the Companies Act for LDEX Preparatory Company, Inc., which is the succeeding company, the Company and LDEX Preparatory Company, Inc. will not hold a shareholders' meeting relating to approval of the company split agreement.

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1. Method of the Company Split
   Absorption-type company split, in which the Company is the splitting company, and LDEX Preparatory Company, Inc. is the succeeding company.
2. Details of the Allocation relating to the Company Split
   At the time of the Company Split, LDEX Preparatory Company, Inc. will not allocate shares or deliver other consideration.
3. Treatment regarding Share Options and Bonds with Share Options Associated with the Company Split The Company has not issued any share options or bonds with share options.
4. 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.
5. Rights and Obligations Suceeded to by the Succeeding Company

In conjuction with the Company Split, the Company will succeed to, among the assets, debts, and other rights, obligations, and status under contracts that the Company holds in relation to the Business as of the time immediately before the Company Split becomes effective, those provided in the Absorption- type Company Split Agreement.

(7) Prospect of Fulfillment of Obligations

We have determined that there would be no problem in the performance of obligations payable by LDEX Preparatory Company, Inc. on or after the effective date of the Company Split.

3. Outline of the Companies Involved in the Company Split (as of March 31, 2019 regarding the Splitting Company)

			Splitting Company		Succeeding Company
(1)	Name		KDDI Corporation		LDEX Preparatory Company, Inc.
(2)	Location		2-3-2Nishi-shinjuku,Shinjuku-ku,		2-21-1 Shibuya, Shibuya-ku, Tokyo
of the Head Office		Tokyo
(3)	Name and Title of		Makoto Takahashi, President		Takashi Kamiyama, President
the Representative
(4)	Summary		Telecommunications business		Video streaming business and related
of Business			business
(5)	Stated Capital		141,852 million yen		50 million yen
(6)	Date		June 1, 1984		December 11, 2019
of Establishment
(7)	Number of Issued Shares		2,532,004,445 shares		10,000 shares
(8)	Fiscal Year-End		March 31		March 31
			KYOCERA Corporation 14.23％
	Major Shareholders		Toyota Motor Corporation 12.67％
		The Master Trust Bank of Japan,
(9)	and Shareholding			KDDI Corporation 100％
	Ltd. (trust account) 9.25％
	Ratio
		Japan Trustee Services Bank,
			Ltd.(trust account) 5.47％
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1. Financial Condition and Business Results for the Most Recent Three Years KDDI Corporation (International Financial Reporting Standards) (consolidated)

Fiscal term		Fiscal year ended	Fiscal year ended		Fiscal year ended
		March 2017	March 2018			March 2019
Equity attributable to owners of the			3,554,423	3,773,703		4,183,492
parent (million yen)
Total assets (million yen)			6,263,826	6,574,555		7,330,416
Equity per share attributable to			1,446.15	1,568.84		1,779.41
owners of the parent (yen)
Operating revenue (million yen)			4,748,259	5,041,978		5,080,353
Operating income (million yen)			912,976	962,793		1,013,729
Profit for the period before income			895,897	955,147		1,010,275
tax (million yen)
Profit for the period attributable to			546,658	572,528		617,669
owners of the parent (million yen)
Basic earnings per share (yen)			221.65	235.54		259.10
LDEX Preparatory Company, Inc.			As of December 12, 2019
(Japanese GAAP）（non-consolidated）
Net assets (million yen)				100
Total assets (million yen)				100
Net assets per share (yen)				10,000

Note) There are no financial results such as operating revenue since it was just established

4. Outline of the Splitting Business Sectors

(1) Details of Business of the Splitting Sectors

The business involved in executing the planning, designing, promotion, and development operation functions of Video Pass within KDDI's video streaming business

1. Business Results of the Splitting Sectors Operating revenue : 10,035 million yen Operating income : 888 million yen
2. Items and Book Values of the Splitting Assets and Liabilities

				（Unit:millions of yen）
	Assets		Liabilities
Items		Book values	Items		Book values
Current Assets		100	Liabilities		0
Total		100	Total		0

5. Status after the Company Split

LDEX Preparatory Company, Inc. is scheduled to receive financing from TV Asahi by transferring the shares held by KDDI as the Company Split comes into effect subject to receiving approval and authorization from the relevant authorities.

At such time, the name, location of the head office, position and name of the representative, capital, and accounting period of LDEX Preparatory Company, Inc. may change.

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6. Future Outlook

Because the Company Split is a company split in which the Company and its consolidated subsidiary, which is 100%-owned by the Company, are involved, the impact on the Company's consolidated results will be minor. In addition, after the acceptance of the above investment, there will be no change in subsidiaries of LDEX Preparatory Company, Inc.

(For reference)

Forecast of the Consolidated Results for the Fiscal Year Ending March 2020 and Consolidated Actual Results for the Fiscal Year Ended March 2019

				(millions of yen）
			Profit for the
	Operating	Operating	Period	Basic
	Attributable to	Earnings per
	Revenue	Income
	Owners of the	Share (yen)
			Parent
Forecast of the
consolidated results	5,200,000	1,020,000	620,000	266.09
for the fiscal year
ending March 2020
Consolidated actual
results for the fiscal	5,080,353	1,013,729	617,669	259.10
year ended March
2019
				End

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