KDDI Annual Report for Shareholders, 'Taking It to the Next Level'.

Tokyo, Japan, Aug 30, 2006 - (JCN Newswire) - KDDI (TSE: 9433) has published its Annual Report to Shareholders for the year ended March 31, 2006. In the Presidents message to Shareholders, President Tadashi Onodera is pleased to report that KDDI's goals continue to expand while the company cultivates new business domains based on the watchwords 'Strategy and Speed', while KDDI, as the Ubiquotous Solution Company, contiues to 'Take It to the Next Level.'

"The fiscal year ended March 2006 marked the start of a new phase for KDDI. Based on the watchwords "Strategy and Speed," we focused on expanding our customer base in preparation for the next stage of profit growth. Specific actions towards an enhanced structure with a view to propelling future business expansion include: the merger with the three TU-KA firms; and the merger with POWERDCOM Inc. based on a comprehensive alliance in telecommunications services with Tokyo Electric Power Co. (TEPCO) and an agreement on the provision of integrated FTTH services. The past fiscal year has therefore been one of purposeful preparation - the first step on the road to greater things. In the year to March 2007, we seek to expand our customer base even further in both mobile business and fixed-line business, with a continued emphasis on "Strategy and Speed."

"In mobile business, with the planned introduction of MNP (Mobile Number Portability) in autumn 2006, we view the expected increase in customer mobility as an opportunity to expand our subscriber base. KDDI also aims to boost its customer base through superiority in handset, content and charges, made possible via high-quality network infrastructure. We seek to quickly raise our share in the Japanese mobile communications market to 30%, or about 30 million subscribers.

"In fixed-line business, we will push forward towards the full-scale development of our FTTH business in collaboration with TEPCO during the year ending March 2007. We continue to make steady progress in preparing for fixed and mobile convergence (FMC) based on our Ultra 3G concept. As part of these efforts, we plan to become one of the first carriers in the world to have a fixed telephony network that has undergone complete IP conversion by the end of March 2008. This will provide users with an ideal communications environment where they can enjoy ubiquitous access to content and services without being aware of any distinction between fixed-line and mobile communications.

"On June 13, 2006, we announced to the media that data leakage had occurred relating to information on approximately four million subscribers to DION, our Internet access service. This information consisted of details about subscribers as of December 18, 2003. On behalf of the company, I apologize sincerely to customers for this breach of privacy. We are implementing measures across the company to ensure that we handle all customer information properly and that there is no recurrence of this event.

"As the Ubiquitous Solution Company, KDDI continues to upgrade and expand its existing businesses while cultivating businesses in new areas. I believe that the two most critical things for us in our corporate activities are, first, to be a "value-creating enterprise" that grows by anticipating the needs of customers and, second, to be a "customer-oriented enterprise" that focuses assiduously on raising customer satisfaction. In my opinion, maximizing customer satisfaction is the quickest route to maximizing corporate value." (Excerpts from President Onodera's address in the KDDI 2006 Annual Report for Shareholders.)

To download the KDDI 2006 Annual Report, or view the report in its flash version, please visit the KDDI IR homepage at http://www.kddi.com/english/corporate/ir/library/annual_report/2006/index.html

or visit the Japan Corporate News (JCN) annual report gallery at http://www.japancorp.net/reports.asp.

About KDDI Corporation

KDDI (TSE: 9433) is a diversified telecommunication operator formed by the merger of DDI, KDD and IDO in 2000, and is the only domestic company that provides both mobile communication service and broadband service. The number of subscribers to the mobile phone services under the au and TuKa brands is over 25 million, and the number of fixed-line subscribers (MyLine) is approximately 7.2 million. The 73 KDDI group companies have more than 8,300 and turnover of 3.060 billion yen through March 2006. At KDDI, aggressive improvement of the communications environment in preparation for the coming ubiquitous network society is underway and KDDI is aiming to become a "ubiquitous solution company" that provides high value-added solutions. For more information, please visit www.kddi.com.

Source: KDDI Corporation

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KDDI Corporation
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