Registry Operator's Proposal

II. BUSINESS CAPABILITIES AND PLAN

D12. The second section of the Registry Operator's Proposal (after the "General Information" section) is a description of the registry operator's Business Capabilities and Plan. This section must include a comprehensive, professional-quality business plan that provides detailed, verified business and financial information about the registry operator. The topics listed below are representative of the type of subjects that will be covered in the Business Capabilities and Plan section of the Registry Operator's Proposal.

D13. The Business Capabilities and Plan section should consist of at least the following:

D13.1. Detailed description of the registry operator's capabilities. This should describe general capabilities and activities. This description also offers the registry operator an opportunity to demonstrate the extent of its business and managerial expertise in activities relevant to the operation of the proposed registry. The following items should, at a bare minimum, be covered:

D13.1.1. Company information. Date of formation, legal status, primary location, size of staff, formal alliances, references, corporate or other structure, ownership structure.

1.KDD Internet Solutions Co., Ltd.

Date of formation : June 6, 2000

Legal status : Corporation

Primary location(Head Office) : 1-8-1 Otemachi, Chiyoda-ku, Tokyo, 100-8186, Japan

Size of staff : 4

Capital : ¥100,000,000

CEO : Tohru Asami

Ownership structure : KDD 100%

2.KDD Corporation(As of March 31, 2000)

Date of formation : April 1, 1953

Legal status : Corporation

Primary location : Head Office : KDD Bldg., 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan

Size of staff : 5,289

Capital : ¥61,777,196,000

President : Tadashi Nishimoto

Ownership Structure

Principal Stockholders (Top 10)

1. Ministry of Posts and Telecommunications Mutual Aid Association : 8.79%

2. Toyota Motor Corporation : 8.00%

3. Nippon Telegraph and Telephone Corp. : 8.00%

4. Singapore Telecommunications, Ltd. : 4.99%

5. Nippon Life Insurance Company : 4.62%

6. The Dai-ichi Mutual Life Insurance Company : 2.50%

7. The Industrial Bank of Japan, Ltd. : 2.21%

8. The Sakura Bank, Ltd. : 2.18%

9. The Dai-Ichi Kangyo Bank, Ltd. : 2.14%

10. The Bank of Tokyo-Mitsubishi, Ltd. : 2.12%

KDD’s Latest Financial Data:

1. Consolidated business results

(Note: The figures are rounded down to the nearest million yen.)

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Operating revenues	597,305	405,721	million yen
	47.2	11.2	%
Operating income	8,875	6,023	million yen
	47.4	- 53.4	%
Ordinary income	23,112	3,831	million yen
	503.3	- 75.4	%
Net income	7,309	- 1,928	million yen
	---	---	%
Net income per share	94.24	- 28.26	yen
Net income per share after making adjustments for latest shares	---	---	yen
Return on stockholders’ equity	1.9	- 0.5
Ordinary income/Total assets	2.1	0.4
Ordinary income/sales	3.9	0.9

Note 1:

Profit and loss on securities under the equity method

Year ended March 2000 : 362 million yen

Year ended March 1999 : 595 million yen

Note 2:

Appraisal profit and loss : 159,713 million yen

Derivative dealing appraisal profit and loss : - 1,030 million yen

Note 3:

The accounting method was changed.

Note 4:

Percentage representation of sales, operating income, ordinary income and net income shows increase or decrease in percentage terms over previous fiscal year.

2.Consolidated financial status

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Total assets	1,139,347	1,045,532	million yen
Stockholders’ equity	423,754	359,743	million yen
Stockholders’ equity ratio	37.2	34.4	%
Stockholders’ equity per share	5,281.37	4,719.59	yen

3. State of consolidated cash flow

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Cash flow resulted from operating activities	45,756	---	million yen
Cash flow resulted from investment activities	- 70,726	---	million yen
Cash flow resulted from financial activities	54,067	---	million yen
Outstanding amount of cash and cash equivalent at year end	217,527	---	million yen

4. Particulars relating to scope of consolidation and application of equity method

Number of consolidated subsidiaries : 31

Number of equity non-consolidated subsidiaries under equity method : 0

Number of affiliated companies under equity method : 4

5. Change in scope of consolidation and application of equity method

Consolidated: (new) 7, (excluded) 0

Equity method: (new) 1, (excluded) 0

6. Consolidated forecast for the fiscal year ended March 2001

(April 1, 2000 - March 31, 2001)

	Mid-term (Sept. 30, ‘01)	End of term (Mar. 31, ’01)	Unit
Operating revenues	333,000	---	million yen
Ordinary income	7,000	---	million yen
Net income	3,000	---	million yen

(Reference) Estimated net income per share (for the whole fiscal year): --- yen.

(Note)This company is due to merge with DDI CORPORATION and IDO CORPORATION on October 1, 2000.

7. Consolidated financial statements (As of March 31, 2000)

(1) Comparative consolidated balance sheet (Unit: millions of yen)

Assets

		Current Term	Preceding Term	Increase/ Decrease
1.	Fixed assets	667,240	673,143	- 5,903
	Tangible fixed assets	471,276	525,124	- 53,848
	Mechanical facilities	93,733	92,414	1,319
	Submarine cable facilities	81,151	43,399	37,751
	Buildings and structures	117,221	116,279	942
	Land	32,949	38,377	- 5,428
	Construction in progress	29,166	114,150	- 84,984
	Others	117,055	120,504	- 3,448
	Intangible fixed assets	63,474	57,415	6,058
	Software	39,320	27,567	11,752
	Consolidated adjustment account	2,884	3,756	- 871
	Others	21,268	26,091	- 4,882
	Investments, etc.	132,489	90,603	41,886
	Investment in securities	109,185	62,994	46,190
	Deferred tax assets	18,461	---	18,461
	Others	21,270	28,140	- 6,869
	Allowance for doubtful debts	(-) 831	(-) 531	(-) 300
	Reserve for loss from investment	(-) 15,596	---	(-) 15,596

2	Current assets	469,125	371,755	97,369
	Cash	42,805	71,893	- 29,088
	Note and account receivable	165,904	122,864	43,039
	Marketable securities	210,604	139,373	71,231
	Others	55,034	41,791	13,242
	Allowance for doubtful debts	(-) 5,223	(-) 4,167	(-) 1,055

3.	Deferred tax assets	353	633	- 280
4.	Exchange conversion adjustment account	2,627	---	2,627
	Total assets	1,139,347	1,045,532	93,814

Liabilities

		Current Term	Preceding Term	Increase/ Decrease
1.	Fixed liabilities	422,958	442,866	- 19,907
	Bonds payable	250,000	250,000	---
	Long-term loans payable	105,029	123,392	- 18,362
	Allowance for retirements benefits	46,402	50,008	- 3,606
	Others	21,526	19,465	2,060

2.	Current liabilities	288,129	233,734	54,394
	Accounts payable	120,270	74,410	45,859
	Others	167,858	159,323	8,534

3.	Exchange conversion adjustment account	---	270	- 270

	Total liabilities	711,087	676,871	34,216

Minority Interests

		Current Term	Preceding Term	Increase/ Decrease
1.	Minority interest	4,504	8,917	- 4,413

	Minority interests total	4,505	8,917	- 4,413

Shareholders’ equity

		Current Term	Preceding Term	Increase/ Decrease
1.	Capital stock	61,777	40,502	21,274
2.	Capital reserve	38,243	16,973	21,270
3.	Consolidated surplus	323,741	302,274	21,466
4.	Treasury stock	(-) 7	(-) 6	(-) 0

	Total shareholders’ equity	423,754	359,743	64,011

Total liabilities, Minority interests and

shareholders’ equity

1,139,347

1,045,532

93,814

(2) Comparative Consolidated Income and Expense Statement (Unit: millions of yen)

	Current Term (4/01/99 -3/31/00)	Preceding Term (4/01/98 - 3/31/99)	Increase/ Decrease
Ordinary income and expenses
(Operating income and expenses)
Operating revenues	597,305	405,721	191,584
Telecommunications operating revenues	381,468	317,419	64,048
Communications facilities construction business revenues	157,844	67,015	90,828
Other businesses revenues	57,993	21,286	36,707
Operating expenses	588,430	399,698	188,731
Telecommunications operating expenses	382,051	314,515	67,535
Communications facilities construction business expenses	156,735	65,527	91,208
Other businesses expenses	49,642	19,655	29,987
Operating income	8,875	6,023	2,852
(Non-operating income and expenses)
Non-operating revenues	42,198	12,408	29,790
Non-operating expenses	27,962	14,599	13,362
Ordinary income	23,112	3,831	19,280
Extraordinary income and expenses
Extraordinary income	43,536	15,386	28,150
Proceeds from sale of land	2,193	1,402	791
Profit on investment securities sold	36,262	13,983	22,278
Profit on equity change	5,080	---	5,080
Extraordinary loss	60,984	13,775	47,208
Depreciation of R & D assets, etc.	---	2,016	- 2,016
Loss on liquidated affiliated companies	---	1,008	- 1,008
Loss on affiliates support	---	3,960	- 3,960
Management structure improvement	21,626	---	21,626
Transfer to investment loss reserve	15,596	---	15,596
Installment for qualified retirement annuity past service cost	18,468	---	18,468
Special retirement pay	5,292	6,790	- 1,497
Net income before adjustment of taxes, etc.	5,664	5,441	223
Corporate tax, etc.	11,540	7,423	4,116
Adjustment of corporate tax, etc.	- 5,899	---	- 5,899
Loss on minority interests	7,285	53	7,231
Net income or loss	7,309	- 1,928	9,238

(3) Comparative Consolidated Statement of Surplus

	Current Term (4/01/99 -3/31/00)	Preceding Term (4/01/98 -3/31/99)	Increase/ Decrease
Consolidated surplus at beginning of year	320,225	307,799	12,425
Consolidated surplus at beginning of year	302,274	---	302,274
Other surplus at beginning of year	---	300,273	- 300,273
Profit reserve at beginning of year	---	7,525	- 7,525
Past year tax effect adjustment	17,950	---	17,950
Increase in consolidated surplus	116	273	- 157
Increase upon increase of consolidated subsidiaries	6	67	- 60
Increase upon increase of companies under equity method	---	206	- 206
Increase upon merger, etc., of consolidated subsidiaries	110	---	110
Decrease in consolidated surplus	3,910	3,870	40
Dividend	3,715	3,213	501
Officer’s bonus	11	70	- 59
(of this payment to Auditors)	(-)	( 5)	(- 5)
Decrease upon increase of consolidated subsidiaries, etc.	40	585	- 545
Decrease upon revisions to surplus of consolidated subsidiaries at beginning of year	143	---	143
Net income or loss	7,309	- 1,928	9,238
Consolidated surplus at year end	323,741	302,274	21,466

(4) Consolidated Statement of Cash Flow (Unit: millions of yen)

	Current Term (4/01/99 -3/31/00)
Cash flow resulted from operating activities
Net income before adjustment of taxes, etc.	5,664
Depreciation	75,196
Loss from elimination of tangible fixed assets	43,334
Increase in investment loss reserve	15,596
Decrease in retirement allowance reserve	- 3,606
Profit on change in equity	- 5,080
Profit from sales of securities	- 64,898
Loss incurred by appraisal of securities	12,019
Increase in receivable	- 41,000
Increase in inventory turnover	- 7,596
Increase in purchase liability	46,200
Decrease in advance received	- 15,003
Others	- 2,762
(Sub-total)	58,064
Interest and dividend received	3,663
Payment for interest	- 10,905
Payment for corporate tax, etc.	- 5,065
Cash flow resulted from operating activities	45,756

Cash flow resulted from investment activities
Expenditure for acquisition of securities	- 11,729
Proceeds from sales of securities	29,548
Expenditure for acquisition of tangible and intangible assets	- 108,401
Proceeds from sales of tangible and intangible assets	30,241
Expenditure for acquisition of investment securities	- 57,697
Proceeds from sales of investment securities	42,587
Others	4,724
Cash flow resulted from investment activities	- 70,726

Cash flow resulted from financial activities
Increase or decrease in short-term borrowing	17,328
Proceeds from long-term borrowing	4,080
Expenditure for repayment of long-term borrowing	- 15,426
Proceeds from stock issue	42,545
Proceeds from stock issue to minority shareholders	7,840
Dividends paid by parent company	- 3,715
Others	1,415
Cash flow resulted from financial activities	54,067

Conversion differences relating to cash and cash equivalent	- 1,012
Increase in cash and cash equivalent	28,084
Cash and cash equivalent at year end	187,475
Cash and cash equivalent of new consolidated subsidiaries at beginning of year	1,966
Cash and cash equivalent at year end	217,527

Outline of Individual Financial Statements for Year Ended March 2000

1. Business results

(Note: The figures are rounded down to the nearest million yen.)

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Operating revenues	395,399	313,160	million yen
	26.3	- 1.0	%
Operating income	9,215	5,321	million yen
	73.2	- 51.7	%
Ordinary income	25,268	9,425	million yen
	168.1	- 43.8	%
Net income	3,927	7,269	million yen
	- 46.0	- 14.0	%
Net income per share	50.63	106.50	yen
Net income per share after making adjustments for latest shares	---	---	yen
Return on stockholders’ equity	1.0	2.0
Ordinary income/Total assets	2.7	1.2
Ordinary income/sales	6.4	3.0

Note 1:Average number of shares during the term:

Fiscal year ended March 2000 : 77,562,090

Fiscal year ended March 1999 : 68,256,823

Note 2:The accounting method was changed.

Note 3:

Percentage representation of sales, operating income, ordinary income and net income shows increase or decrease in percentage terms over previous fiscal year.

2. Stock dividend

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Cash dividends applicable to the year per share (Mid-term) (End of term)	50.00 25.00 25.00	50.00 25.00 25.00	yen yen yen
Total annual dividends	3,911	3,416	Million yen
Dividend propensity	99.6	47.0	%
Dividend/Stockholder’s equity	0.9	0.9	%

Note:Breakdown of dividends for the fiscal year ended March 2000.(yen)

Memorial dividend : 00.00

Special dividend : 00.00

3. Financial status

	Fiscal year ended March 2000	Fiscal year ended March 1999	Unit
Total assets	943,844	924,733	million yen
Stockholders’ equity	424,112	371,258	million yen
Stockholders’ equity ratio	44.9	40.1	%
Stockholders’ equity per share	5,285.77	4,870.57	yen

Note 1:Number of stocks issued:

Fiscal year ended March 2000 : 80,236,623

Fiscal year ended March 1999 : 76,224,823

4. Forecast for the fiscal year ended March 2001 (April 1, 2000 - March 31, 2001)

	Mid-term (Sept. 30, ’00)	End of term (Mar. 31, ’01)	Unit
Operating revenues	191,000	---	million yen
Ordinary income	5,000	---	million yen
Net income	2,000	---	million yen
Dividend per share	25.00	---	yen
	total 25.00		yen

(Reference)Estimated net income per share (for the whole fiscal year): --.-- yen.

(Note)This company is due to merge with DDI CORPORATION and IDO CORPORATION on October 1, 2000.

5. Individual Financial Statements (As of March 31, 2000)

(1)Balance Sheet(Unit: millions of yen)

Assets

		Current Term	Preceding Term	Increase/ Decrease
1.	Fixed assets	633,234	641,417	- 8,183
	Telecommunications operation fixed assets	435,141	493,389	- 58,248
	Tangible fixed assets	377,056	441,912	- 64,855
	Mechanical facilities	91,843	91,508	335
	Antenna facilities	3,370	10,005	- 6,635
	Terminal facilities	856	847	8
	Transmission line facilities	29,413	35,435	- 6,021
	Civil engineering facilities	39,170	38,722	448
	Submarine cable facilities	85,818	44,813	41,005
	Buildings	58,483	60,168	- 1,684
	Structures	4,470	6,181	- 1,710
	Machinery and equipment	3,296	4,251	- 955
	Vehicles	99	158	- 59
	Tools, instruments, and supplies	11,955	9,286	2,669
	Land	24,352	28,728	- 4,375
	Construction in progress	23,924	111,805	- 87,881
	Intangible fixed assets	58,084	51,477	6,607
	Submarine cable usage right	3,105	1,362	1,742
	Satellite usage right	4,053	11,745	- 7,691
	Facility usage right	4,606	4,275	330
	Software	38,362	27,244	11,117
	Leasehold	473	536	- 62
	Other intangible fixed assets	7,482	6,311	1,171
	Non-telecommunication operation fixed asset	22,156	22,510	- 354
	Tangible fixed assets	22,149	22,496	- 346
	Intangible fixed assets	7	14	- 7
	Investments, etc.	175,936	125,517	50,419
	Investment in securities	77,919	32,325	45,593
	Investment	598	1,654	- 1,056
	Investment-affiliated companies	59,552	58,265	1,287
	Long-term loan receivable	1,390	2	1,388
	In-company long-term loan receivable	6,345	7,439	- 1,094
	Long-term loans to affiliated companies	15,916	15,925	- 8
	Long-term prepaid expenses	5,506	4,960	546
	Deferred tax assets	13,010	---	13,010
	Other investments	5,659	5,542	117
	Allowance for doubtful debts	(-) 883	(-) 598	(-) 285
	Reserve for loss from investment in affiliated companies	(-) 9,080	---	(-) 9,080

2	Current assets	310,650	283,315	27,335
	Cash	23,993	47,103	- 23,110
	Accounts receivable	73,269	72,245	1,024
	Accrued income	21,089	18,546	2,543
	Marketable securities	184,948	133,198	51,749
	Treasury stock	7	6	0
	Stores	3,782	2,585	1,196
	Prepaid expenses	951	403	547
	Short-term loans to affiliated companies	---	8,612	- 8,612
	Deferred assets	3,263	---	3,263
	Other current assets	4,327	4,572	- 244
	Allowance for doubtful debts	(-) 4,981	(-) 3,959	(-) 1,022

	Total assets	943,884	924,733	19,151

Liabilities

		Current Term	Preceding Term	Increase/ Decrease
1.	Fixed liabilities	388,058	408,541	- 20,482
	Bonds payable	250,000	250,000	---
	Long-term loans payable	90,923	106,918	- 15,995
	Long-term loans payable to affiliated companies	---	446	- 446
	Allowance for retirements benefits	46,087	49,864	- 3,776
	Other fixed liabilities	1,047	1,311	- 264

2.	Current liabilities	131,714	144,933	- 13,219
	Fixed assets payable within one year	15,455	12,309	3,146
	Accounts payable	30,223	32,658	- 2,434
	Short-term borrowings	---	11,395	- 11,395
	Accrued amount payable	25,595	18,360	7,234
	Accrued corporate tax payable, etc.	23,470	14,379	9,090
	Accrued expenses	8,942	340	8,601
	Advances received	15,870	30,675	- 14,804
	Deposits payable	3,811	1,102	2,709
	Employee savings deposits	8,149	9,692	- 1,542
	Short-term loans to affiliated companies	---	13,242	- 13,242
	Other current liabilities	194	777	- 582

	Total liabilities	519,772	553,474	- 33,702

Shareholders’ equity

		Current Term	Preceding Term	Increase/ Decrease
1.	Capital stock	61,777	40,502	21,274
2.	Legal reserves	46,468	24,826	21,642
	Capital reserve	38,243	16,973	21,270
	Retained earnings reserve	8,224	7,853	371

3.	Capital surplus	315,866	305,929	9,937
	Accelerated depreciation reserve	2,130	4,082	- 1,952
	Accumulated fund for fixed assets advanced depreciation	2,129	1,588	540
	special account
	Reserves for advanced depreciation for fixed assets	1,117	603	514
	Other reserves	291,950	291,950	---
	Inappropriate retained earnings at the end of this term	18,538	7,704	10,834
	(of which is income from in term)	(3,927)	(7,269)	(- 3,342)
	Total liabilities equity	424,112	371,258	52,853

Total liabilities and shareholder’s equity

943,884

924,733

19,151

(2)Comparative Income Statement(Unit: millions of yen)

	Current Term	Preceding Term	Increase/ Decrease
Ordinary income and expenses
(Operating income and expenses)
Telecommunications business
Operating revenues	353,246	306,219	47,027
Voice transmission revenues	275,016	248,134	26,882
Data transmission revenue	19,310	10,074	9,236
Leased circuit revenue	28,590	26,697	1,892
Telegram revenue	144	388	- 243
Other revenues	30,183	20,924	9,259
Operating expenses	355,987	303,400	52,587
Sales expenses	120,618	81,528	39,089
Operation expenses	8,323	9,979	- 1,656
Maintenance expenses	30,403	27,157	3,245
Overhead expenses	2,984	4,118	- 1,134
Administrative expenses	9,808	13,435	- 3,627
Research and development expenses	8,366	2,388	5,978
Depreciation expenses	60,709	49,636	11,073
Fixed assets retirement expenses	877	1,882	- 1,004
Communication network charges	109,479	110,012	- 532
Taxes	4,416	3,260	1,155
Telecommunications operating income or loss (-)	- 2,741	2,818	- 5,560
Operating income and expenses from other businesses
Operating revenues	42,153	6,941	35,211
Operating expenses	30,196	4,438	25,757
Operating income from other businesses	11,957	2,502	9,454
Operating income	9,215	5,321	3,893
(Non-operating income and expenses)
Non-operating revenues	40,449	16,525	23,924
Interest income and discounts	973	1,404	- 431
Interest on marketable securities	892	821	71
Dividends received	2,003	119	1,883
Dividends from affiliated companies	---	6,150	- 6,150
Profit from sale of securities	28,541	---	28,541
Profit on transfer of circuit use rights	---	2,265	- 2,265
Miscellaneous revenues	8,038	5,763	2,275
Non-operating expenses	24,397	12,421	11,976
Interest paid and discounts	4,200	2,028	2,171
Interest on bond	5,875	5,085	789
Decrease in marketable securities	10,653	331	10,322
Miscellaneous expenses	3,667	4,975	- 1,307
Ordinary income	25,268	9,425	15,842
Extraordinary income and expenses
Extraordinary income	38,004	12,162	25,842
Proceeds from sale of land	1,742	4,204	- 2,461
Profit on investment securities sold	36,262	7,958	28,304
Extraordinary loss	56,001	13,775	42,225
Depreciation of R & D assets, etc.	---	2,016	- 2,016
Loss on liquidated affiliated companies	---	1,008	- 1,008
Loss on affiliates support	---	3,960	- 3,960
Management structure improvement	23,159	---	23,159
Reserve for loss from investment in affiliated companies Transferred	9,080	---	9,080
Installment for qualified retirement annuity past service cost	18,468	---	18,468
Special retirement pay	5,292	6,790	- 1,497
Net income before tax	7,271	7,812	- 540
Corporate tax, etc.	9,520	542	8,977
Adjustment of corporate tax, etc.	- 6,176	---	- 6,176
Net income	3,927	7,269	- 3,342
Income carried over from last term	2,717	2,202	514
Past year tax effect adjustment	10,097	---	10,097
Disposition of voluntary reserve upon application of tax effect Accounting	3,893	---	3,893
Interim dividend	1,905	1,606	298
Profit reserve for interim dividend	190	160	29
Inappropriate earnings for current term	18,538	7,704	10,834

(3)Comparative Proposed Appropriations of Retained Earnings(Unit: millions of yen)

Item	Current Term	Preceding Term
Inappropriate retained earnings for current term Reversal of special depreciation reserve Reversal of special account for reduced-value fixed assets Reversal of accumulated fund for reduced-value fixed assets Total The company plans to appropriate this amount as follows: Profit reserve Stockholders’ dividends Special depreciation reserve Accumulated fund for special account for reduced-value fixed assets Accumulated fund for reduced-value fixed assets General reserve Amount carried over to next term	18,538 517 2,129 123 21,309 201 2,005 (¥25 per stock) 592 1,003 1,708 13,000 2,797	7,704 902 1,588 70 10,266 181 b1,809 (¥25 per stock) (¥17per absorption new share) 492 3,671 1,394 --- 2,717

Note:

1.Dividends paid to shareholders of absorption new shares are calculated on a pro rata basis from the initial date in reckoning. Fraction of yen resulting from the calculation are rounded up to the next whole yen.

2.Dispositions from and accumulations to special depreciation reserve, accumulated fund for fixed assets value reduction special account, and accumulated fund for fixed assets value reduction were made in accordance with the exceptions to Tax Laws Act, and exclude the amount equivalent to deferred tax liability.

l KDD’s Philosophy

“Bringing People Together”

KDD’s foremost focus on our customers underpins our commitment as a global communications company to advance our industry and create a better world with services of superior quality.

l KDD’s Mission

“Your Message, Our Mission.”

To meet the growing and ever-changing communication needs of our customers with innovative services and expert consultation.

“The World, Within Your Reach.”

To bring more people in closer touch with one another worldwide by building a high-quality , low-cost global network.

“Your Imagination, Realized”

To help our customers turn their communication dreams into reality by providing fully integrated and seamless services, pioneering next-generation services, and conducting research and development at the cutting edge of technology.

l KDD’s Corporate Structure(please see attachment “KDD annual report” page 23)

3. KDD’s affiliates

3.1.Internet-related business

3.1.1.KDD Okinawa Service Co., Ltd.

Homepage URL : http://www.kdd-ok.ne.jp/

Head Office Location : KDD Naha Bldg. 5F, 4-1 Higashi-machi, Naha-shi, Okinawa, 900-0034, Japan

Telephone Number : +81-98-865-3322

Fax Number : +81-98-865-3397

Summary of business undertakings:

- The management and administration of land, buildings, and appurtenant facilities

- The collection by proxy of communications charges, fees, etc.

- The sale of portable and cellular telephone terminals

- The maintenance and operation of telephone terminal facilities, communications and other facilities

- The resale of international and domestic telephones

- Provision of utilities and services for the purpose of telephone audio and video, and data transmission

- Internet connection services (dedicated-line IP connection)

- Internet dial-up connection services (US military bases)

- Internet telephone services

- In-company LAN construction services

- Antenna facility maintenance services (registered company to carry out authorized inspections of wireless facilities)

- Television conferencing services (registered with US Sprint, Affinity)

Corporate profile:

(Established)

September 25, 1995

(Capital)

Yen 80 million

(President)

Harumi Mima

(Employees)

(KDD investment contributions)

KDD 100%

Description of main areas of business:

KDD Okinawa Service Co., Ltd. (KDD-OK) receives across-the-board consignments from KDD for the work involved in the management and administration of the primary facilities within Okinawa Prefecture, the maintenance and operation of Okinawa-based communications facilities, and the sale of communications services in Okinawa. In such a way, KDD-OK successfully maintains a level of business activities that are closely knit with the regional community. Established four years ago, KDD-OK brings to bear the accumulated know-how of KDD to engage in international and domestic telephone resale and the sale of portable and cellular telephones, while also positively taking on the challenge of new business initiatives, notably Internet-related business.

3.1.2. KDD Communications Inc.

Homepage URL : http://www.kcom.ne.jp/

Head Office Location : (On the premises of the KDD Otemachi Building) 1-8-1 Otemachi, Chiyoda-ku, Tokyo 100-8186, Japan

Telephone Number : +81-3-3351-7420

Fax Number : +81-3-3351-7499

Summary of business undertakings:

- Internet connection services

- The Internet telephone service "KDD Super Economy Phone"

- WWW server rental service

- Internet engineering services

- Network operation and maintenance (video communications and data communications)

- International television conferencing, video image delivery service

- The administration of KDD Hall and the staging of video/graphics events

- "Account Plus," a service offering the management of international telephone charges on a per-extension and a per-corporate section basis

- "Hello Phone," an international rental telephone service

- Domestic and international telephone resale service

- "Mobile Express," a portable/cellular telephone rental service for overseas travelers

- "C-HAS," a financial settlement network service

Corporate profile:

(Established)

May 1990

(Capital)

Yen 1,820 million

(President)

Toshiyuki Akutsu

(Employees)

Approx.250

(KDD investment contribution)

KDD100%

Description of main areas of business:

KDD Communications Inc. (KCOM) principal business activity is to provide a wide variety of communications-related services. Not only does the company provide the familiar Internet connection services and super-bargain Internet telephone service, but it also cater to a wide variety of other requirements in the form of money-saving domestic and international telephone services, international television conferencing, telegrams expressing congratulations or condolences, an inexpensive cellular telephone rental service for travelers abroad, a financial settlement network service (C-HAS), and remote access to Infonet services from mobile terminals, to name just some of its contributions to the world of communications.

3.1.3. KDD MediaNet Inc.

Homepage URL : http://www.kmn.co.jp/

Head Office Location : Uchisaiwai-cho Dai Bldg. 1F,1-3-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011, Japan

Telephone Number : +81-3-3539-1400

Fax Number : +81-3-3539-1411

Summary of business undertakings:

- Cable Internet business

- Consulting services relating to cable Internet business

- The systems development involved in cable

- Internet business

- Other related undertakings

Corporate profile:

(Established)

June 10, 1998

(Capital)

Yen 490 million

(President)

Ryosuke Yamazoe

(Employees)

(KDD investment contribution)

KDD100%

Description of main areas of business:

Fueled by communications know-how and abundant experience of joint experiments in numerous locations, KDD MediaNet Inc. provides total support ranging from the planning of CATV Internet projects in alliance with CATV companies, all the way to network construction and operating.

3.1.4. Japan Internet Exchange Co., Ltd.

Homepage URL : http://www.jpix.co.jp/

Head Office Location : 1-8-1 Otemachi, Chiyoda-ku, Tokyo 100-0004, Japan

Telephone Number : +81-3-3243-9579

Fax Number : +81-3-3243-9597

Summary of business undertakings:

-Internet exchange services

Corporate Profile:

(Established)

July 10, 1997

(Capital)

Yen 250 million

(President)

Hiroshi Kobayashi

(Employees)

(KDD investment contribution)

KDD 24%

Description of main areas of business:

Internet exchange (IX) consists of creating interconnectivity among the networks of numerous Internet service providers (ISPs) for the exchange of communications traffic.

Japan Internet Exchange Co., Ltd. was established in July 1997 as a company invested in by 16 concerns such as national-standard ISPs for the purpose of conducting IX business under the control of a neutral consortium-type business. With the IX exchange facilities located in KDD's Otemachi Building, services came into operation in November 1997. The company is engaged in safe, high-quality, high-reliability operations, inspired by a commitment to enhancing convenience for Japanese Internet users and to developing a sound, healthy Internet industry.

3.2.Research and development of cutting edge technology

3.2.1. OSI Plus Corporation

Homepage URL : http://www.osiplus.co.jp/

Head Office Location : KDD Meguro Bldg. 4F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-8932, Japan

Telephone Number : +81-3-3794-8411

Fax Number : +81-3-3794-8415

Summary of business undertakings:

- The development, design, manufacture, an sale of communications software and related communications systems

- The planning, management, surveying and inspection work, and consulting pertaining to the above

- The sale of data communications equipment and devices

- All categories of work related and appurtenant to the above

Corporate profile:

(Established)

September 28, 1987

(Capital)

Yen 490 million

(President)

Masazumi Mori

(Employees)

(KDD investment contribution)

KDD 89.8%

Description of main areas of business:

As a data communications frontier responsible for the creation and building up of open-network environments and advanced multimedia environments, OSI Plus Corporation is an expert group that provides diverse systems and products. OSI Plus aims to be an "enterprise that contributes to the information-oriented society" with the provision of next-generation technology, notably Internet telephone (VoIP) system, CTI servers, and voice recognition systems.

3.2.2. KDD Research and Development Laboratories Inc.

Homepage URL : http://www.kddlabs.co.jp

Head Office Location : 2-1-15 Ohara, Kamifukuoka-shi, Saitama 356-8502, Japan

Telephone Number : +81-492-78-7445

Fax Number : +81-492-78-7510

Summary of business undertakings:

- The research and development of new technologies and the sale of products developed

- The undertaking on consignment of surveying and research

- The technological transfer of the successful results of research and development

- The provision of licenses

- Education, training, technical support, and consulting

Corporate profile:

(Established)

April 1, 1998

(Capital)

Yen 2,000 million

(President)

Shigeyuki Akiba

(Employees)

159（as of October 1,1999）

(KDD investment contribution)

KDD100%

3.2.3. KDD Technology Corporation

Homepage URL : http://www.kddtech.co.jp/

Head Office Location : KDD Meguro Bldg. 1F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan

Telephone Number : +81-3-3794-8371

Fax Number : +81-3-3794-7600

Summary of business undertakings:

-Software development

-Network and systems creation

Corporate profile:

(Established)

August 3, 1988

(Capital)

Yen 294 million

(President)

Toshiharu Saito

(Employees)

(KDD investment contribution)

KDD100%

3.3.Data communications engineering

3.3.1.KDD WinStar Corporation

Homepage URL : http://www.kddwinstar.co.jp/

Head Office Location : KDD Nihonbashi Building, 1-5-11 Nihonbashi Honmachi, Chuo-ku, Tokyo 103-0023, Japan

Telephone Number : +81-3-3517-2510

Fax Number : +81-3-3517-2515

Summary of business undertakings:

- Telecommunications and other undertakings for the installation and provision of access lines linking members and type I telecommunications carriers with the use of fixed wireless access (FWA)

Corporate profile:

(Established)

December 28, 1998

(Capital)

Yen 1,000 million

(President)

Muneo Abe

(Employees)

(KDD investment contribution)

KDD 55%

Description of main areas of business:

Fixed wireless access (FWA) is a new service that entails providing low-cost network accessing lines via wireless facilities installed on the roof of customer premises. KDD WinStar came into being as the result of a merger between KDD and WinStar. The combination of KDD's vast know-how in the field of network construction and operation, harnessed to its long and successful worldwide track record in wireless communication technology, and WinStar's pioneering FWA record that boasts the top market share in America, the world's frontrunner in FWA technology, enables KDD WinStar to assure its customers of access lines ideally suited to the creation and building up of optimum FWA networking environments. Harnessing the superlative reliability and quality of KDD network services with the access lines provided by KDD WinStar has enabled us to make available to its customers communications services at a price that is lower than ever before.

3.3.2. Telecomet International Inc.

Homepage URL : http://www.telecomet.co.jp

Head Office Location : Center Office 22F, Bunkyo Green Court, 2-28-8 Honkomagome, Bunkyo-ku, Tokyo 113-0021, Japan

Telephone Number : +81-3-5978-8560

Fax Number : +81-3-5978-8590

Summary of business undertakings:

- Systems integration services in the construction of data communications networks

- The development, manufacture, sale, renting, installation and maintenance of hardware / software related to data communications systems

- Consulting relating to data communications systems, networking

Corporate profile:

(Established)

November 1, 1984

(Capital)

Yen 1,440 million

(President)

Masanori Amano

(Employees)

219

(KDD investment contribution)

KDD 80%

Description of main areas of business:

Telecomet International Inc. offers total solutions in a wide spectrum of areas from data communications network design and construction to customer support by marshaling abundant lines of the latest networking products and systems from major manufacturers both at home and abroad, and by bringing to bear its long years of data communications know-how and network integration technology to cater to a wide diversity of customer needs. Its cutting-edge global network integration service has proved particularly popular with customers, offering as it does coordination with the communications carriers around the world, support services linking principal centers worldwide, 24-hour maintenance, and other benefits.

3.4.Network construction, operation, and maintenance

3.4.1.KDD Submarine Cable Systems Inc.

Homepage URL : http://www.kddscs.co.jp/

Head Office Location : Shinjuku Park Tower Bldg., 3-7-1 Nishi-Shinjuku, Shinjuku-ku

Tokyo 163-1033, Japan

Telephone Number : +81-3-5908-3790

Fax Number : +81-3-5908-3929

Summary of business undertakings:

- Technological development of and consulting services for optical fiber submarine cable systems, construction contracting

Corporate profile:

(Established)

May 1992

(Capital)

Yen 5,686.25 million

(President)

Yasuhiko Niiro

(Employees)

270

(KDD investment contribution)

KDD 66.23%

Description of main areas of business:

These days, it is high-volume optical fiber submarine cable systems that play the greatest role as a transmission route for the support of data communications as they increasingly assume international dimensions. As a world-representative company specializing in the construction of optical fiber submarine cable systems, KDD Submarine Cable Systems Inc. (KDD-SCS) has contributed to the building of the world's communications infrastructure with its unique technology and highly experienced human resources. In order to meet the demands of the present day for data communications and the rapid spread of the Internet, KDD-SCS is committed to the positive furtherance of projects for the construction of optical fiber submarine cable systems, fueled as the company is by the desire to contribute to the creation of an environment for the international information-oriented era that the 21st century is bound to usher in.

3.4.2. KDD TELECOM NETWORK Co., Ltd.

Head Office Location : KDD Bldg. 22F, 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan

Telephone Number : +81-3-3347-6111

Fax Number : +81-3-3347-5970

Summary of business undertakings:

- The operation, maintenance, and management of data communications facilities and communications networks

- Consulting

- Training relating to data communications facilities

- The design, development, sale, and installation of data communications equipment, systems, software, etc.

Corporate profile:

(Established)

June 1, 1998

(Capital)

Yen 490 million

(President)

Nobuo Nezu

(Employees)

396 (as of September 1999)

(KDD investment contribution)

KDD 100%

Description of main areas of business:

Amid the increasing demand for multimedia communications in recent years, KDD TELECOM NETWORK Co., Ltd. is an organization that specializes in the operating and management of transmission networks such as KDD's optical fiber submarine cable network, digital satellite communications systems, and others, as well as those of telephone and ISDN exchange network. As just such a specialist body, the company was established for the purpose of devoting its energies to the administration of communications networks with a view to finding more efficient operating solutions. From the springboard of the network operation skills and technology built up by KDD over many years, collaboration with communications carriers from all over the world, database management, and other such expertise, it looks to providing the kind of engineering ideally tailored to customer needs in the form of the operating maintenance, etc. of communications networks and data communications systems, where there is so much demand for integrated management and globalization, as well as to providing comprehensive support in the form of technical training and other guidance relating to networks.

3.4.3.Japan Telecommunications Engineering Service Co., Ltd.

Head Office Location : KDD Bldg, 2-3-2 Nishi-Shinjuku, Shinjuku-ku,Tokyo 163-8003, Japan

Telephone Number : +81-3-3347-8101

Fax Number : +81-3-3347-8099

Summary of business undertakings:

- The design, development, and construction of data communications facilities, and the contracting out of such work

- The design, development, manufacture, sale, and installation of data communications equipment and devices, and the design, development, sale, and installation of data communications systems etc.

- Operation and maintenance involved in data communications facilities and communications networks, and operating management thereof

- Consulting services relating to data communications facilities and communications networks

- Electrical engineering work, telecommunications engineering, civil engineering, the design, implementation, and supervision of construction work, and the contracting out of such work, etc.

Corporate profile:

(Established)

June 1, 1999

(Capital)

Yen 320 million

(President)

Yutaka Shouno

(Employees)

130

(KDD investment contribution)

KDD 80%

Description of main areas of business:

KDD Highway Telecommunications Service Co., Ltd. (KHT) operates principally from network centers located in 12 major cities nationwide to engage in the maintenance of the approximately 9,000 kilometers of domestic optical fiber network that constitutes KDD's backbone transmission routes nationwide. These optical fiber channels run along the nationﾕs major expressways all the way from Hokkaido to Kyushu. Not only this, but KHT is also responsible, among other important areas, for the laying of overland optical communications networks, and the construction and technical consulting involved in the creation of related facilities. Taking full advantage of KDD's long-accumulated know-how, it caters extensively to diversifying customer needs.

3.4.4. Kokusai Marine Engineering Corporation

Homepage URL : http://www.k-marine.co.jp/

Head Office Location : 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan

Telephone Number : +81-3-3794-8347

Fax Number : +81-3-3794-8340

Summary of business undertakings:

- Marine research and surveying

- Marine civil engineering works

- Engineering consulting

Corporate profile:

(Established)

November 10, 1988

(Capital)

Yen 50 million

(President)

Yuichi Shirasaki

(Employees)

(KDD investment contribution)

KDD 70%

Description of main areas of business:

Kokusai marine Engineering Corporation is engaged in a wide spectrum of activities that range from marine surveying, construction work through engineering, and all the way to consulting. In its marine surveying operations, the company uses the latest submarine measurement systems and underwater robots for high-precision, yet economical surveying. We cater to a wide range of needs, including the surveying and measurement involved in construction work, academic marine surveys, and environmental surveys, to name just a few of its areas of work. Bringing to bear its vast experience and expertise in the laying, maintenance, and repair of submarine cable, it performs marine, coastal, and land-based construction and maintenance projects both at home and abroad, while also engaging in diverse consulting and multifaceted engineering work such as marine and land-based construction work, among many other operations.

3.4.5. KOKUSAI CABLE SHIP Co., Ltd.

Head Office Location : KDD Meguro Bldg. 2F, 2-1-23 Naka-Meguro, Meguro-ku, Tokyo 153-0061, Japan

Telephone Number : +81-3-3794-8250

Fax Number : +81-3-3794-8258

Summary of business undertakings:

- Submarine cable-laying and maintenance

- The conveyance of submarine cable

- Marine surveying and research

- Operations appurtenant to those described above

Corporate profile:

(Established)

March 1966

(Capital)

Yen100 million

(President)

Hiroyuki Oshida

(Employees)

approx. 60

(KDD investment contribution)

KDD 100%

Description of main areas of business:

KOKUSAI CABLE SHIP Co., Ltd (KCS) possesses the cable-laying and cable-repair vessels the KDD OCEAN-LINK (approximately 9,600 tons) and the KDD PACIFIC-LINK (approximately 8,000 tons), with the help of which it has engaged for many years in the laying and repair of submarine cable. KCS's has won a high degree of acclaim over the years both at home and abroad for its technological prowess and its long track record of tasks brought to a successful conclusion. The demand for optical submarine cable is expected to continue to boom in the years ahead owing to the growth and progress in multimedia communications, most notably the Internet. KCS looks to honing its technological prowess in the field of the laying and maintenance of optical submarine cable in order to meet this demand and to remain at the cutting edge of world technology.

3.5.Mobile communications business

3.5.1. KDD MOBILE Inc.

Homepage URL : http://www.kddmobile.co.jp

Head Office Location : 2-1-23 Naka-meguro, Meguro-ku, Tokyo 153-0061, Japan

Telephone Number : +81-3-3794-8275

Fax Number : +81-3-3794-8487

Summary of business undertakings:

- The sale and renting of portable satellite communications terminals

- The construction, operation, and maintenance involved in communications facilities

- Radio wave inspections involved in to INMARSAT satellite communications

- The development, facility design, construction, operating, and maintenance of INMARSAT services

- The administration of telecommunications projects and consulting services relating thereto Corporate profile

Corporate profile:

(Established)

April 1998

(Capital)

Yen 300 million

(President)

Yutaka Goto

(Employees)

101(as of September 30, 1999)

(KDD investment contribution)

KDD 100%

Description of main areas of business:

In addition to the efficient and across-the-board implementation of the entire range of operations involved in INMARSAT satellite communications services, KDD MOBILE Inc. is also engaged in multifaceted areas of the mobile communications business. Besides radio-wave on-the-spot inspections, licensing management, terminal sales, facility installation, and other operations relating to the INMARSAT satellite communications services provided by KDD, KDD Mobile also performs the development, facility design, construction, and operating maintenance of INMARSAT services. In addition to being responsible for absolutely every stage of the provision of INMARSAT services from start to finish, the company is also active as a comprehensive engineering company in the field of mobile communications, handling a broad spectrum of work that ranges from the operating and maintenance of state-of-the-art middle and low earth orbit satellite services like ICO and Orbcomm, all the way to communications consulting services.

3.6 Telemarketing business

3.6.1. KDD Telemarketing Inc.

Homepage URL : http://www1.kcom.ne.jp/telema/

Head Office Location : KDD Bldg., Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8003, Japan

Telephone Number : +81-3-3347-8143

Fax Number : +81-3-3347-6100

Summary of business undertakings:

- Telemarketing

- Telemarketing-related services

- Support with the running of call centers

- International telephone operator related work

Corporate profile:

(Established)

May 30, 1996

(Capital)

Yen 200 million

(President)

Shozo Murase

(Employees)

Staff: approx. 400

Telemarketing personnel: approx. 2,500

(KDD investment contribution)

KDD 70%

Description of main areas of business:

- Bringing to bear KDD's know-how accumulated in the field of international telephone operations, KDD Telemarketing Inc. assists companies with their marketing activities, while guaranteeing the strictest security. The company uses the telephone to conduct client coverage on behalf of companies to open up markets at low cost, enhance customer satisfaction, and gain other business advantages. Its principal business activities include the following.

- The acquisition of new customers, provision of product information, sales reception services

- The maintenance of existing clients, campaign activities for augmented business

- Communication and intermediary services with clients speaking foreign languages (linguistic support)

- Market research such as telephone questionnaire surveys etc.

- Narrowing down of potential customers, arrangement of appointments for visits from sales personnel

- Payment guidance and debt reminder

The company also provide the following services as a result of harnessing the capacity to provide services described above with information systems.

- Support with liaison and communications between companies and their personnel stationed overseas or on business trip in Japan or abroad, in times of emergency

- Automatic reception and information provision with recorded messages and fax

- Call center construction consulting, systems administration support

- Enveloping and dispatch of bills, invoices, direct mail, etc.; client data input support

- Internet help desk

3.6.2. KDD Telemarketing Okinawa Inc.

Head Office Location : 1-32-7 Chuo, Okinawa-shi, Okinawa 904-0004, Japan

Telephone Number : +81-98-921-0500

Fax Number : +81-98-921-0516

Summary of business undertakings:

-Telemarketing (Inbound, Outbound)

-Data entry

-Help desk operations for internet etc.

Corporate profile:

(Established)

June 7, 1999

(Capital)

Yen 50 million

(President)

Harumi Mima

(Employees)

Telemarketing personnel:50

(KDD investment contribution)

KDD 70%

Description of main areas of business:

KDD Telemarketing Okinawa Inc. works in contact centers (call centers) equipped with the latest communications and computer facilities to provide "call center business," "networking solutions business," and "toll-free telephone sales" in a format ideally suited to the particular requirements of the customer. The company is in an excellent position to meet the outsourcing demands of a broad spectrum of companies.

3.7. Research consulting

3.7.1. KDD Research Institute, Inc.

Homepage URL : http://www.kdd-ri.co.jp/

Head Office Location : 2-3-2 Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-8550, Japan

Telephone Number : +81-3-3347-9110

Fax Number : +81-3-3347-9123

Summary of business undertakings:

- Information gathering, surveying, and research principally pertaining to domestic and overseas telecommunications business

- The preparation and analysis of statistical reference data principally pertaining to telecommunications business

- The summary, organization, management, and storage of reference data etc.

- The editing and issue of publications principally pertaining to telecommunications business

- Other operations related to and appurtenant to each of the items listed above

Corporate profile:

(Established)

October 16, 1990

(Capital)

Yen 450 million

(President)

Tsunekazu Matsudaira

(Employees)

(KDD investment contribution)

KDD 100%

Description of main areas of business:

Bringing to bear the databases and information relating to worldwide data communications business that KDD has accumulated over long years of experience, KDD Research Institute, Inc. serves as a think-tank where this amassed information and data are studied, analyzed, and processed into statistics for the purpose of extracting ideas and proposals.

The principal services offered by KDD Research Institute are surveying and research, market research, the furnishing of tariff information, the publication of "KDD Research Institute R & A," the gathering, preparation, and processing of statistics, and reference data management, among other activities.

As a professional group engaged in the surveying and analysis of the field of data communications, the company has won a high degree of acclaim for our work.

For all this, however, we are intent on further augmenting our surveying and analysis capacities by promoting collaboration and alliances with other surveying and consulting companies both at home and abroad.

4. Merger of KDD, DDI and IDO.

KDD Corporation (President: Tadashi Nishimoto; principal office: Tokyo), DDI CORPORATION (President: Yusai Okuyama; principal office: Tokyo) and IDO CORPORATION (President: Satoshi Nakagawa; principal office: Tokyo) hereby announce they have signed an agreement to merge on October 1, 2000.

Details of merger is as follows.

4.1 Outline of merger

Merger timetable:

Board meeting to approve merger agreement)April 5, 2000

Signing of merger agreement) April 5, 2000

General meeting of shareholders to approve merger agreement)

DDI:June 28, 2000

KDD: June 29, 2000

IDO: June 30, 2000

Date of merger) October 1, 2000

Registration of merger) October 2, 2000

Surviving company: DDI CORPORATION

Merger share ratios:

Company	DDI (Par value per share: ¥5,000)	KDD (Par value per share: ¥500)
Merger ratio	9.21	1

Company	DDI (Par value per share: ¥5,000)	IDO (Par value per share: ¥50,000)
Merger ratio	29	1

Note: Par value of shares in each company is converted to same value.

Proportional allocation of shares:

One share in DDI (par value per share: ¥5,000) will be issued per [92.1] shares in KDD (par value per share: ¥500). One share in DDI (par value per share: ¥5,000) will be issued per 2.9 shares in IDO (par value per share: ¥50,000).

(Reasons for merger ratios)

The merger ratio for DDI and KDD was calculated based on the average closing price on the TSE over the six months up to December 15, 1999 of shares issued by each company. The ratio in the case of IDO was determined based on the results of calculations by a third-party agency, and finalized by agreement among the parties to the merger.

(Number of new shares issued through merger)

Par value ordinary shares: 1,345,260.60

(par value per share: ¥5,000)

(Calculated on the basis of the capital stock of KDD and IDO as of March 31, 2000.)

Money delivered due to merger:

In place of the interim dividend for the interim period from April 1 to September 30, 2000, the shareholders or pledges recorded in the final register of shareholders of KDD as of the date prior to the date of merger will be paid by DDI, without delay after the date of merger, a merger compensation of ¥25 per KDD’s share or its pledge held by such shareholders or pledges. The amount of the merger compensation may be changed, however, upon consultation among the three companies, depending on the KDD’s status of assets on the date of merger.

4.2. Outline of parties to the merger

Trade name	DDI CORPORATION	KDD Corporation	IDO CORPORATION
Incorporation	June 1, 1984	March 24, 1953	March 9, 1987
Principal office	8, Ichiban-cho, Chiyoda-ku, Tokyo	2-3-2, Nishi-shinjuku, Shinjuku-ku, Tokyo	6, Rokuban-cho, Chiyoda-ku, Tokyo
Representative	Yusai Okuyama	Tadashi Nishimoto	Satoshi Nakagawa
Capital	¥72,634 million	¥40,502 million	¥68,740 million
Capital stock (par value)	2,274,442 shares (¥5,000)	76,224,823 shares (¥500)	1,374,804 shares (¥50,000)
Shareholders' equity	¥278,360 million	¥370,601 million	¥42,220 million
Total assets	¥807,969 million	¥884,218 million	¥459,931 million
Employees	3,101	5,593	1,022
Main shareholders and shareholdings	Kyocera Corp. 25.16% The Sumitomo Trust & Banking Co., Ltd . 3.97% IBJ Trust and Banking Co., Ltd.* 4.16% The Chase Manhattan Bank, N.A., London 3.60%	Ministry of Posts & Telecommunications Mutual Aid Association 9.26% Toyota Motor Corp. 8.42% Nippon Telegraph and Telephone Corp. 8.42% Nippon Life Insurance Co. 4.86%	Toyota Motor Corp. 62.83% Tokyo Electric Power Co., Ltd. 11.78% Chubu Electric Power Co., Ltd. 7.57% KDD Corp. 2.40%

Note: Data correct as of September 30, 1999.

* IBJ Trust and Banking's stake is the trust property of Sony Corp.

Financial results over past three years

	DDI (surviving company)			KDD			IDO
Accounting period	Year ending Mar. 1997	Year ending Mar. 1998	Year ending Mar. 1999	Year ending Mar. 1997	Year ending Mar. 1998	Year ending Mar. 1999	Year ending Mar. 1997	Year ending Mar. 1998	Year ending Mar. 1999
Sales (¥m)	557,839	535,882	605,510	322,458	316,413	313,160	267,440	338,825	410,710
Ordinary profit (¥m)	67,756	39,503	33,648	20,807	16,761	9,425	-5,889	-38,553	26,938
Net income (¥m)	37,783	23,740	16,867	10,165	8,451	7,269	-5,919	-38,583	7,509
Net income per share (¥)	17,376.07	10,876.41	7,416.01	158.16	131.50	106.50	-12,918.15	-81,949.68	5,461.93
Dividend per share (¥)	1,790.00	1,790.00	1,790.00	50.00	50.00	50.00	–	–	–
Shareholders' equity per share (¥)	113,939.39	134,341.24	139,938.22	5,493.98	5,573.70	4,870.57	11,158.14	8,987.77	14,449.70

4.3. Status after merger

Trade name : DDI CORPORATION

Logo mark: : KDDI

Line of business : Type I telecommunications carrier

Principal office : 8 Ichiban-cho, Chiyoda-ku, Tokyo

Representative : Yusai Okuyama (President)

Capital : ¥139,363 million (¥72,634million, the capital as of March 31, 2000 plus ¥60,001million, the amount of capital increase by allocation to third parties, and ¥6,726million, the capital added by the merger)

Total assets : ¥2.1521 trillion(combined total assets of each company as of September 30, 1999)

Accounting period : March 31

4.4. Purpose of merger

With the Japanese telecommunications market growing increasingly competitive on a global scale as a result of deregulation and technological developments, DDI, KDD and IDO have been vigorously negotiating to build a secure position for themselves as a core telecommunications carrier, and as a result have reached agreement as equals on the following basic points. They have now signed the agreement:

- Becoming a comprehensive telecommunications carrier capable of offering seamless mobile, domestic and international telecom services will realize synergies enabling DDI, KDD and IDO to provide services more effectively and thereby compete more efficiently against the NTT group. By enhancing their capital base, DDI, KDD and IDO will be able to accelerate moves to expand the scope of their businesses.

- Through improving operating efficiency and competitiveness and expanding their scope of business, DDI, KDD and IDO will be able to offer world-leading services and aggressively expand marketing operations to capture the support of a wide customer base ranging from individuals to mega-companies both in Japan and abroad.

- By concentrating management resources on one merged company and harmonizing the business objectives of personnel at all three firms in line with a unified business strategy, DDI, KDD and IDO aim to become a powerful business entity with the strength to compete against the dominant carriers in Japan and overseas.

In addition to becoming increasingly cutthroat, the market is also seeing a rapid shift from voice to data communications, and from fixed to mobile communications. Being able to offer seamless service by developing both mobile and IP networks has thus grown to be of vital importance. Merging will enable DDI, KDD and IDO to respond to this changing environment, allowing them to pool their accumulated know-how, develop and expand an integrated backbone and provide a seamless nationwide mobile phone service, and become a leading player in developing next-generation mobile communications services.

Focusing as it will on mobile and IP network services and making more effective use of management resources, the global and comprehensive telecommunications carrier that the merger will create will greatly benefit the Japanese public and make a genuine contribution to the development of the economy as a whole.

4.5. Information of merged companies

4.5.1. DDI Corporation (pre-merger)

Headquarters : 8 Ichiban-cho, Chiyoda-ku, Tokyo, 102-8401 JAPAN

Established : 1 June 1984

Capitalization : Yen 72,635 million

Officers :

Founder and Chairman Emeritus: Kazuo Inamori

Chairman: Jiro Ushio

President: Yusai Okuyama

Group Enterprises:

DDI CELLULAR GROUP

DDI POCKET TELEPHONE GROUP

A conspicuous feature of trends in the telecommunications market was the rapid growth of demand for mobile telephone services. There was also further diversification of consumer needs, including increased demand for Internet access and other data communications services. The focus of the market continued to shift from fixed-line to wireless communications, and from voice to data communications. In this market environment, DDI focused on the expansion of its long-distance, inter-national, cellular telephone, PHS.

DDI’s non-consolidated profit in fiscal year 1999 was affected by a reduction in long-distance telephone charges in February 1998, and by the growing popularity of discount ser-vices. Operating revenues rose by 13.0% over the previous year's level to ¥605,510 million, and recurring profit declined by 23.3% to ¥33,648 million. Net income was 29.0% lower at ¥16,867 million. On a consolidated basis, operating revenues increased by 5.8% to ¥1,246,582 million, while recurring profit declined by 20.0% to ¥50,866 million. Net income was 105.3% higher at ¥17,061 million.

Long-Distance Services:

DDI worked to enhance its competitiveness primarily through pricing strategies, including the introduction of new discounts to make services more accessible to existing users, especially in the area of voice calls. The expansion of the Internet was reflected in increased demand for data communications services. DDI responded by cutting charges for its Frame Relay Service and launching a new Cell Relay Service to support high-volume data communications. It further enhanced its competitiveness in the high-growth field of data communications by adding new service options to its DION Internet connection system.

The improvement of network infrastructure continued. DDI acquired the Japan Information Highway (JIH) system, a large-capacity submarine cable encircling the entire Japanese archipelago. It also continued to convert its network to fiber optic cable. These enhancements will further reinforce network reliability while ensuring that DDI is able to keep pace with future growth in the demand for telecommunications services.

Cellular-Phone Services:

The DDI CELLULAR Group achieved steady growth in its subscriber base, which increased by 22.4% to 5,298,900 as of March 31, 1999.

In July 1998 KANSAI CELLULAR TELEPHONE Co., KYUSHU CELLULAR TELEPHONE Co. and OKINAWA CELLULAR TELEPHONE Co. launched a new service based on the cdmaOne technology, which is superior to the PDC system in terms of both voice quality and suitability for data communications. The new service was subsequently introduced by CHUGOKU CELLULAR TELEPHONE, HOKURIKU CELLULAR TELEPHONE and SHIKOKU CELLULAR TELEPHONE in March 1999, and by HOKKAIDO CELLULAR TELEPHONE Co. and TOHOKU CELLULAR TELEPHONE Co. in April 1999. Seamless nationwide coverage was established in April 1999, when IDO launched cdmaOne services in the Tokyo and Tokai regions.

To improve the competitiveness of existing services, DDI made a number of changes to its system of charges. It launched a new plan that combines a basic charge with a certain amount of free call time and also introduced discount services. C-Mail, a mail service for cellular telephones, and the EZweb service, which allows Internet access from cdmaOne telephones, were introduced in April 1999.

PHS Services:

The advantages of PHS relative to cellular-telephone services are shrinking in terms of charges and functions. In an effort to expand its user base, DDI introduced new charging plans and ser-vices and continued to improve the functionality of its network. However, the business environment was extremely harsh, and other PHS operators made major changes in their operations.

The number of subscribers registered with the Pocket Telephone companies reached a peak of 3,617,000 in July 1998. This was followed by net declines each month until February 1999. DDI sought to halt this trend by introducing a number of innovations, including the P-Mail DX (P-Mail Deluxe) telephone with enhanced mail functions, and the Moji Denwa (Text Phone), which was specially designed to take advantage of the data communications capabilities of PHS. These measures brought a return to net growth, and by March 1999 the total number of subscribers was only 0.8% below the previous year’s level at 3,457,000.

Group Integration to Match Market Needs:

DDI is converting its network to fiberoptic technology and building an IP network to support data communications. These enhancements will enable it to respond flexibly to the demand for high-speed, large-capacity services.

As customer needs become more sophisticated and diverse, DDI will also enhance its ability to market its services through a consulting approach as a provider of comprehensive solutions that include the design of corporate communications systems. In April 1999 it established DDI Network Systems to handle its solutions business.

Members of the DDI Group have joined forces to develop and provide the EZweb service, which was launched in April 1999. EZweb allows users to access Internet information from a cellular telephone. Access is via DION, an Internet connection service operated by DDI.

Reducing Reliance on the NTT Network:

Until now DDI has connected to the NTT network via relay exchanges. It is now moving closer to users by introducing group center (GC) connections at local exchanges. This will lower DDI's reliance on the NTT network and reduce the amount of access charges paid to NTT.

DDI also plans to reduce the reliance of the CELLULAR TELEPHONE companies on the NTT network by enabling them to use group connections via the DDI network. This change, which has already been implemented for the PHS companies, will also bring savings in the amount of access charges paid to NTT. Group connections are expected to enhance the earnings of all group companies.

History:

1984

- Established

1986

- Launch of leased circuit service

1987

- Launch of long-distance service

1989

- Launch of cellular service

1993

- Establishment of NIPPON IRIDIUM CORPORATION

1994

- Start of Tu-Ka cellular service(1.5 GHz digital service for Tokyo and Chubu areas)

1995

- Launch of PHS service

1997

- Business tie-up with IDO

1998

- Launch of cdmaOne service

- Launch of International Telephone service

- Launch of IRIDIUM service

4.5.2. IDO CORPORATION

Capital : Paid-up Capital: Yen 68,740.2 million

Major Stockholders :

Toyota Motor Corporation (63.2%)

Tokyo Electric Power Co., Inc. (11.8%)

Chubu Electric Power Co., Inc. (7.6%)

Total 48 companies

Sales and Services Areas :

Tokyo and Kanagawa, Chiba, Saitama, Ibaraki, Tochigi, Gunma, Yamanashi, Aichi, Gifu, Mie, Shizuoka and Nagano prefectures

Companies Financed by IDO Capital :

Toyota Media Station Incorporated

Satellite Phone Japan, Ltd..

ATIS Corporation

Strategy for the future:

IDO has a Steadfast Commitment to Meeting Future Challenges and Implementing New Technologies Introducing Revolutionary "cdmaOne" service for the 21^st Century.

The April 1999 launch of "cdmaOne" service marked a milestone in cellular industry history. "cdmaOne" is a completely new digital telecommunications technology based on CDMA (Code Division Multiple Access), a technology developed in the U.S. It offers outstanding voice and high-speed data transmission capabilities and represents the future in the continually advancing world of telecommunications. Countries around the world are moving toward the future in cellular phone technology by adopting "cdmaOne."

Gaining High Acclaim for its Digital Network Service:

Since the company began operations in 1994, the company’s digital network service Personal Digital Cellular system (PDC) has been highly rated by its customers. With a coverage of approximately 99% of the population, it now has 3 million subscribers who appreciate both the coverage and quality of its network. Furthermore, because of its roaming agreements with the DDI Cellular Group, customers can use its digital network service throughout Japan. In 1997, it developed the Digital G series of handsets capable of data transmission speeds of 9.6Kbps. The new G series, which is lighter than previous models and offers functions such as text message services, increases the convenience and usefulness of its digital network service

Continuous R&D Is Enhancing Network Reliability:

Latest Developments in Mobile Communications Technology Even when viewed against the background of the rapidly changing telecommunications industry, the latest advances in mobile multimedia communications technology are particularly striking. IDO employs the latest technology from all over the world to build a stable and reliable communications network. In the future, the company plans to continue augmenting its own R&D with other technical advances to continue providing convenient and attractive services to its customers.

Completely Digitized Intelligent Network:

When users cross multiple wireless zones at high speeds, being able to use their cellular phones requires advanced high-speed transmission technologies built into their receivers. IDO's service area is finely divided into zones where a number of base stations are installed. These stations are connected to digital switches with fiber-optic cables. The digital switch circuits and connections also operate on digital signaling for ultrafast processing and, through a dedicated computer, form an intelligent network that delivers robust high-speed services.

Introduction of Latest Network Monitoring System :

IDO developed and installed the network monitoring system I-NOS to allow its many networks to be managed as a single unit. The system enables the real-time comprehension of transmission load amounts and the status of equipment, such as base stations, switches and transmitters, and allows for flexible network management. With this system, IDO can offer reliable, stable services around the clock.

5. Strategic Partnership with Singapore Telecom

KDD and Singapore Telecom (SingTel) today announced that the two companies will form a strategic partnership to better serve their corporate customers in Asia and around the world. Reflecting their strong commitment to the partnership, KDD and SingTel have agreed to undertake a share swap.

Under the agreement, KDD will issue 4,011,800 new shares, or approximately 5% of its enlarged share capital, to SingTel. At the same time, SingTel will issue to KDD 221,310,898 new shares, representing 1.43% of the enlarged SingTel share capital. The pricing of the share swap was arrived at following negotiations on a willing buyer and a willing seller basis.

5.1. Formation of joint venture

In conjunction with the partnership, KDD and SingTel have signed an Agreement-In-Principle with the intent to form an equally-owned joint venture (JV) that will provide premium seamless and managed end-to-end telecommunications services to multinational corporations and business customers. These services include Asynchronous Transfer Mode (ATM), frame relay, international leased circuits and services based on Internet Protocol.

Although KDD and SingTel presently have their own networks in the Asia Pacific, the two companies intend for the JV to provide services on a common platform. To meet this objective, the JV will develop an integrated ATM backbone in the Asia Pacific region with connectivity to North America and Europe. The backbone’s initial nodes will be located in Singapore, Tokyo and Hong Kong.

KDD and SingTel will contribute assets such as submarine cables and equipment as well as second personnel to the JV. Ownership of the ATM backbone will provide the JV with operational flexibility and enable it to better manage its cost structure so that it can offer services that are competitively priced. Total amount of investment of the JV over the five years will be in the region of US$350 million.

Presently, KDD and SingTel work with other carriers to provide global service to their customers. Where necessary, the JV will do likewise to distribute its services. It will provide comprehensive back office support including consolidated billing, clearing house, product development and network management functions. Customers will have a single point of contact and a single contract with the JV. The services provided by the JV will be useful to other carriers who are keen to serve their customers with managed end-to-end services.

KDD and SingTel expect to sign a definitive agreement on the JV by end of February 2000 with the incorporation of the JV scheduled for April 2000.

5.2. Strengthening of a partnership

KDD President, Mr. Tadashi Nishimoto, said: “The new equity relationship between SingTel and KDD is definitely a new step in our long-standing and tested partnership that will enable solid expansion of our business especially in the Asian region. The two of us standing shoulder to shoulder will remodel the Asian telecommunications market.” “The true purpose of our alliance and our agreement to establish a joint venture,” said Mr. Nishimoto, “is for the customers to benefit from abundant opportunities to enjoy premium quality, seamless end-to-end managed products and services based on an integrated ATM backbone. It is my strong belief that SingTel and KDD will continue to be the leaders in the Asian region in the new millennium.”

SingTel President and CEO, Brigadier General Lee Hsien Yang, said: “SingTel is pleased to welcome KDD, an established and well-regarded telecommunications company, as a strategic partner. The share swap reflects the strong and significant commitment of KDD and SingTel to the partnership and cements the already close relationship of our two companies.

“KDD and SingTel have had a long history of working together. We were founder members of the WorldPartners alliance and we have also collaborated closely in the planning of many submarine cable systems in the region. This strengthening of our partnership will ensure that both companies continue to play leading roles in the region even as the telecommunications industry continues to consolidate.”

About Singapore Telecom:

Singapore Telecom is a world-class provider of domestic, international and mobile telecommunications as well as postal services. Turnover and net profit for the Group in 1998/99 were S$4.88 billion and S$1.96 billion respectively. Publicly listed in October 1993, Singapore Telecom is Singapore’s largest company in terms of market capitalization.

The Singapore Telecom Group has invested more than S$2.5 billion in telecommunications-related projects around the world, especially in the Asia Pacific. It owns interests in 54 ventures and operations in 19 countries including the Philippines, Thailand and Belgium. It has representative offices in 18 cities in Asia, North America and Europe.

6. Others

KDD has telecommunication service agreements and cooperative relationships with carriers of over 200 countries.