The environment surrounding the telecommunications business is undergoing major change. The surge in popularity of smartphones and other "smart devices" is reshaping the mobile communications market, and content is growing richer and more diverse, including music, video, books and other content services.In the fi xed-line communications market, we see potential new value for offloading mobile data traffic. We are entering a new era of competition, characterized by services that are a fusion of fixed-line and mobile communications.

Against this backdrop, KDDI is pursuing two growth strategies, the "3M Strategy" and a "Global Strategy." The 3M Strategy derives from the initial letters of "Multi-use," "Multinetwork" and "Multi-device." This describes the growth strategy for our domestic business and for maximizing our strength that originates from possessing both a mobile and a fixed-line communications business.Through compelling and multivaried applications and content, the KDDI Group aims to leverage its easy-to-connect and convenient networks to provide a new type telecommunications to customers throughout the world at any time and on their devices of choice.

In March 2012, we commenced "au Smart Value" and "au Smart Pass" services as the first step in rolling out the "Smart Passport Concept," and these new services have already been well received by numerous customers. We will continue to enhance new service offerings based on our "3M Strategy," which aims to maximize customer value.

Our "Global Strategy" is to develop an information and communication technology (ICT) platform that centers on our quality, high-end "TELEHOUSE" global data center brand. At the same time, we aim to strengthen our provision of one-stop, high-value-added ICT solutions that are optimize for our customers.

Even as we advance these transformations, one element remains unchanged. We will continue in our efforts to leverage the power of ICT and the provision of high-value-added services over highly reliable networks to contribute to the realization of a society that is prosperous, safe and secure.For KDDI, as a telecommunications operator, this is our social responsibility, as well as our raison d'etre.

KDDI aims to deliver inspiration, security and joy to the people of the world, and we will achieve these goals through ongoing innovation. We ask for your continued support in these endeavors.

July 2012
Takashi Tanaka
President