KDD to Establish KDD Research & Development Laboratories. Inc., Expand Business of Group Companies, and Restructure Overseas Operations

1. Incorporation of KDD Research & Development Laboratories, Inc.

KDD will establish KDD Research & Development Laboratories, Inc. on April 1 by separating its R&D establishment from KDD's managerial structure. This aims at increasing revenues from external sources by securing contracts for researches and studies at home and overseas as well as by selling the outcome of research and development through making most of the world-famous abilities to develop new technologies. The new company will continue researches and developments related to the business of the parent company keeping in close relationship with it.

2. Expansion of Business of Existing Group Companies

(1)Establishment of KDD MOBILE, INC.

On April 1 Kokusai Telecommunications Installation Co., Ltd. (KTI), KDD's subsidiary offering lease of and consulting for satellite earth stations installed on board ships for maritime satellite communications will be evolved into an overall provider of INMARSAT services. The company renamed to KDD MOBILE, INC. is to take over from KDD the tasks relating to planning and marketing of INMARSAT services as well as the construction, operation and maintenance of business facilities including earth stations. At the same time its capital is to be increased to three hundred million yen. In addition to the existing business, all the business activities relating to INMARSAT services will be transferred and concentrated on the new company. KDD MOBILE, INC. will also market INMARSAT services in response to upcoming deregulation.

(2)Transfer of Part of Accounting and Personnel Affairs

Out of the functions relating to accounting and personnel affairs, those relating to bookkeeping and welfare will be moved to KDD TELESERVE, Inc. on April 1. The company is gunning for KDD Group's accounting and personnel affairs center with increased revenues earned from not only the existing services including personnel agency service and telephone interpretation, and office support services that are similar functions transferred from other group companies.

(3)Transfer of Network Operation and Maintenance for business Communications Services In order to streamline businesses of the KDD group as a whole, and aiming at earning outsourcing demands from in particular corporate customers, KDD Communications Inc. will assume from KDD the network operation and maintenance for business communications services including leased circuit service.

3. Partial Restructure of Overseas Operations

(1)Merger of KDD Deutschland and TELECOMET INTERNATIONAL

In anticipation of offering telephone services in Germany in the future, and in order to augment total customer support systems from telecom services to sales and maintenance of terminals, KDD Deutschland GmbH and TELECOMET INTERNATIONAL GmbH will be merged into KDD TELECOMET Deutschland GmbH on May 1. The new company's focus will be to scrupulously meet customers' needs and provide useful services of higher quality, aggressively responding to the progress of deregulation of telecommunications in Europe.

(2)Change of Sydney Liaison Office to Local Company

On April 1 KDD will change status of Sydney Liaison Office from a representative office to a foreign locale, KDD Australia Pty. Ltd. The company will look at feasibility of a business to provide communications services including sales and maintenance of terminals.