1.Purpose of Making au CORPORATION KDDI’s Wholly Owned Subsidiary

KDDI, born on October 1 this year as a comprehensive information and communications company providing global and seamless communications services, domestic and international, as well as fixed and mobile, is prepared for an era of world-scale mega competition developing with deregulation and technological innovation as a backdrop. As a part of this determination, KDDI is now working on reinforcement of its group strength so as to flexibly meet customers' diversified demands as well as to make a positive business deployment. In particular, KDDI recognizes that au Corp., born on November 1 this year, is a strategically core business offering high quality nation-wide seamless services under its nationally unified brand,"au" besides the mobile business in Kanto and Tokai Areas provided by KDDI. KDDI places great importance on au Corp. as a business for substantiating its own "Mobile & IP" strategy. To realize, with this fundamental recognition in mind, effective management of the whole business and dynamic business deployment by making most of KDDI group's management resources, it is essential to foster the construction of a further reinforced business structure based on capital integration as well as to promote the convergence of services on fixed and mobile systems centered on IP. Both Companies reached the conclusion that it is indispensable to make au CORPORATION, at the time it started, a KDDI's wholly owned subsidiary for the KDDI group to develop.

2.Outline of Equity Exchange

(1) Schedule of equity exchange Board of directors meeting to approve equity exchange contract: December 15, 2000* Extraordinary stockholders' meeting to approve equity exchange contract: Late in February, 2001(planned) Date of equity exchange: March 31, 2001(planned) (*)The KDDI Board of Directors Meeting held on December 15, 2000 approved the signing as of November 30, 2000 of the equity exchange contract. (2) Equity exchange ratio Company KDDI (Fully controlling parent company) auCORPORATION (Wholly owned subsidiary) Exchange ratio 1.000 2.015 (To convert face value per share of the each company to be the same.) Notes: 1.Ratio of issue to stockholders 20.15 shares of KDDI's stock (face value per stock: 5,000yen) will be issued against one share of au CORPORATION's stock (face value per stock: 50,000yen). No KDDI's stock will be issued for au CORPORATION's stocks held already by KDDI. 2.Basis for calculation of exchange ratio Calculation of equity exchange ratio was entrusted to third party and both parties have agreed on the exchange ratio as shown above as a result of consultation made between them referring to the results of the calculation. 3.Results of calculation by third Party, and method and basis for calculation The third party calculated the equity exchange ratio, with respect to KDDI, based on the analysis of the stock price trends prior to the concluding date of the equity exchange contract, the EBITDA multiplication analysis and other factors, and with respect to au CORPORATION based on the EBITDA multiplication analysis and other factors, taking account of its standing as a non-listed company. 4.Number of KDDI’s new shares issued for equity exchange Ordinary par value shares: 497,729.78(face value per share:5,000yen) 5.Initial date in reckoning of dividends The initial date in reckoning of dividends for new shares issued for the equity exchange will be March 31, 2001. 6.Grant for equity exchange No grant will be paid for the equity exchange.

3.Profile of Parties to Equity Exchange

4.State of Affairs after Equity Exchange

(1)On capital After the equity exchange the KDDI's capital will be 141,851 million yen(total of the capital as of October 1, 2000, 139,363 million yen plus the increased capital by the equity exchange, 2,488 million yen). (2)Possible influence on performance for current year No significant change in consolidated performance is expected from the equity exchange, since au Corp. is already a KDDI's consolidated subsidiary.