KDDI, Sumitomo Announce Capital Alliance For Subsidiaries in Brazil

KDDI, Sumitomo Announce Capital Alliance
For Subsidiaries in Brazil

Tokyo, April 9, 2002 - KDDI Corp. and Sumitomo Corp. are pleased to announce a capital alliance between their Brazilian subsidiaries to help the companies expand business opportunities in the fast growing Brazilian telecommunications market.

Under the terms of the agreement, Sumitomo and its Brazilian subsidiary, Brazil Sumitomo Corp., will invest about 1.6 millions R$ in exchange for newly-issued shares in KDDI Brazil, KDDI's Brazilian subsidiary.

The information technology and telecommunications markets have grown rapidly in Brazil following the privatization of the state-run telecommunications company in July 1998. The market's huge growth potential is attracting attention from around the world.

KDDI, through its KDDI Brazil subsidiary, provides ISP, hosting, and consulting services, and also develops and sells Web/WAP-related software mainly to the Brazilian operations of Japanese companies.

KDDI Brazil expects future deregulation to lead to a huge increase in business opportunities as well as increases in competition and decided to raise capital through a third-party share sale to strengthen its corporate structure and help develop new business.

For its part, Sumitomo considers the Brazilian IT and telecommunications market to be one of great importance for the company. Aiming to spur on the growth of this market, the company sought a trustworthy and technically excellent partner.

Sumitomo's management decided that the best way to work with the KDDI Group and to expand its business in Brazil was through a capital alliance. With these new funding arrangements for KDDI Brazil, the strategies of KDDI and Sumitomo have become more consistent.

KDDI Brazil plans to add network services to its existing service lineup, expanding its business in Sao Paulo and Rio de Janeiro, a move that aims to increase customer satisfaction.

Outline of KDDI Brazil:

Name : KDDI Brazil (Previously KDD NetHall) (Portuguese Name: KDDI do Brasil Ltda.)

Capital : 3,792,500 R$

Shareholders : KDDI Group (50.1%), Sumitomo Group (42.0%), Others (7.9%)

Main business : ISP services;
IT consulting, maintenance and operations;
hosting and collocation services for servers and other IT equipment;
development, customization, sales of and support for Web-related and other software.