Mid-Term Management Strategy (FY23.3-FY26.3)

Going forward, it will be crucial to create value for our customers in order to drive revenue growth and improve retention.
We will advance our strategy of telecommunications with value-added, aiming to further ARPU revenues increase. This includes generating value-added through collaboration with Lawson and focusing on building a network that fully leverages the potential of 5G.

In the DX, Corporate business domains, we will continue to build upon our network and infrastructure foundation, just as we do in the Personal service segment, by expanding into growth areas such as IoT, data centers, and AI-driven digital value-added services. We also aim to increase the number of IDs by strengthening our approach to small and medium-sized enterprises.
Additionally, we are expanding our business domains and customer touchpoints through initiatives such as the launch of "WAKONX (in Japanese only)," a business platform designed for the AI era. By providing AI, data infrastructure, and network operations and maintenance as a one-stop solution, essential components for accelerating social DX, we aim to solve societal and industry challenges and support the business growth of our corporate clients.

In Financial business, performance has been strong, driven primarily by our robust customer base in banking and credit card services. At au Jibun Bank, which continues to earn strong customer support, we are steadily expanding our customer base while maintaining a balanced approach between deposits and loans.
Going forward, we aim to further grow our customer touchpoints and accelerate business expansion by enhancing each financial service and maximizing synergies with our telecommunications.

The Energy business has implemented initiatives aimed at stabilizing operations, resulting in an operating income of 11.7 billion yen for FY2024-03. The number of contracts for au Denki has also begun to increase. By leveraging synergies with telecommunications centered on au Denki, we aim to accelerate business growth.
In addition, through our group companies, we will strive to achieve both contributions to carbon neutrality and business growth.

In the LX domain of Orbit 2, we aim to scale our business by combining our assets with those of our partners. Our partnership with SpaceX has entered its fifth year, and our collaboration continues to deepen. As a critical infrastructure supporting society, we will continue to expand the scope of our services.
We are also leveraging synergies with Lawson in the LX domain. In the entertainment area, we are creating new value by integrating our electronic ticketing platform with Lawson's entertainment services, expanding the number of events handled and enhancing customer engagement.
Furthermore, by combining KDDI's mobility-related services with LAWSON, we aim to improve the convenience of transportation and shopping in local communities.

To accelerate the realization of a decarbonized society, we have established four environmental goals aimed at achieving net-zero emissions by the end of FY2040. The entire group is working together to meet these targets. To reduce Scope 1 and Scope 2 emissions, we are utilizing solar power provided by au Renewable Energy. In addition, we are engaging in dialogue with our business partners to reduce Scope 3 emissions.
In FY2025, we relocate our headquarters to a new office in Takanawa. We are developing various initiatives to foster a flexible work environment that is not bound by time or location, enabling collaboration among KDDI Group employees and external partners. Through this, we aim to cultivate a culture of co-creation and drive our transformation into a human resources first company.

In terms of cost efficiency, we will appropriately control investment levels while accelerating the deployment of 5G networks by promoting infrastructure sharing and leveraging advanced technologies. Additionally, we are transforming our sales structure and streamlining sales channels, targeting cost efficiencies of approximately 100 billion yen over the mid-term.
For cash allocation, we strive to balance growth investments with shareholder returns. Excluding financial business, we aim to generate approximately 3 trillion yen in operating CF over the two fiscal years from FY2025.3 to FY2026.3. This cash flow will be allocated to approximately 1.3 trillion yen in CAPEX and around 200 billion yen ^[5] in strategic business investments.
Regarding shareholder returns, we are committed to sustainable dividend increases and aim for a dividend payout ratio of over 40%. In addition, we will conduct share buybacks in a flexible manner.