J:COM and KDDI to Invest in Shop Channel

Synergy between J:COM, Sumitomo Corporation, KDDI, and Shop Channel No.2015-170

Jupiter Telecommunications Co., Ltd.

Sumitomo Corporation

KDDI CORPORATION

December 24,2015

At the Board of Directors Meeting held today, Jupiter Telecommunications Co., Ltd. (head office: Chiyoda-ku, Tokyo; CEO and President: Toshio Maki; hereinafter J:COM) resolved to acquire 50% of the shares of Jupiter Shop Channel Co., Ltd. (head office: Chuo-ku, Tokyo; CEO and President: Atsushi Shinohara; hereinafter Shop Channel). Simultaneously, KDDI Corporation (head office: Chiyoda-ku, Tokyo; President: Takashi Tanaka; hereinafter KDDI) will acquire 5% of shares held in Shop Channel by Sumitomo Corporation (head office: Chuo-ku, Tokyo, CEO and President: Kuniharu Nakamura). J:COM, KDDI and Sumitomo Corporation will cooperate in striving to further increase the corporate value of Shop Channel and to boost customer satisfaction.

1. Overview Shop Channel began Japans first dedicated television shopping channel to incorporate live telecasting in November 1996. It is now the countrys largest television shopping business, broadcast live 24 hours a day, 365 days of the year. It can be viewed free-of-charge in 28.71 million households nationwide via cable and satellite television. Annual sales have reached 136.5 billion yen, with the company enjoying revenue growth for 18 successive years since its founding.

J:COM will acquire all of Shop Channels shares held through a special purpose entity by an investment fund to which Bain Capital Partners, LP (head office: Massachusetts, USA) provides investment advice, thereby becoming a 50% shareholder in Shop Channel. At the same time, KDDI will acquire 5% of Shop Channels shares from Sumitomo Corporation, which presently holds 50%. The three companies will cooperate to manage Shop Channel, aiming to achieve further growth for the company and to further increase its corporate value.

2. Aims and Objectives J:COM is Japans largest cable TV operator that provides services to approximately 5 million households in five major metropolitan areas of Japan. J:COM develops and delivers various services that are of use to customers, centered on broadcasting and telecommunications, based on a strategy of J:COM Everywhere. Following its cable television, high-speed internet and telephony services, the company has begun providing electricity supply services since 2012, and mobile telephone services from October 2015, in continued efforts to provide its customers a more convenient, comfortable and fulfilling lifestyle. The overlap existing in the customer bases of Shop Channel and J:COM will enable proactive sales activities and promotion measures to one anothers customers, which is expected to help increase the customer base and sales of both companies.

Sumitomo Corporations retail business, spanning manufacturing to retail, boasts strong expertise and talent owing to a hands-on management approach. The company has been involved in the operation of Shop Channel since its establishment in 1996, and has offered the company management and operational know-how that Sumitomo Corporation has acquired since its foundation. Now, by welcoming J:COM and KDDI as new partners, Sumitomo Corporation hopes to further strengthen key strategies to grow Shop Channels customer base and internet sales. Sumitomo Corporation will continue to position Shop Channel as its core business in its retail strategy and will strive for the companys further growth and increased corporate value.

KDDI has engaged in providing au Smart Value, a service offering discount on a combination of au smartphones with J:COM services (TV, internet, telephone landlines). It has also worked to develop the cable television business through collaborative operation of J:COM with Sumitomo Corporation. Furthermore, in recent years it has strived to offer services suited to customers lifestyles aside from the telecommunications field, such as the development of business in mobile payment and retail sales, centered on au WALLET and au WALLET MARKET. With this new investment, it will tackle a new service that combines the smartphone with television shopping, in order to achieve ongoing growth in Shop Channels corporate value.

J:COM, KDDI and Sumitomo Corporation will each leverage their respective management resources for the development of new television shopping programs and to reach a new customer base through the combination of television and internet in an effort to further expand business for Shop Channel.

3. Outline of Shop Channel (as of March, 2015) Company Name Jupiter Shop Channel Co., Ltd.

Establishment Date November 22,1996

(Began broadcasting on November 1, 1996)

Head Office Kokkan-building, 1-4-1, Shinkawa, Chuo-ku, Tokyo

Shareholder Composition Sumitomo Corporation 50%

BCJ-10 (*) 50%

(*Associated company of Bain Capital Partners)

Sales and Net Profit Unit: Billions of yen

FY2012 FY2013 FY2014

Sales 127.2 132.8 136.5

Net Profits 12.6 14.0 14.5

Paid-in Capital 4.4 billion yen

President and CEO Atsushi Shinohara

Number of Employees 931

Number of Operators About 750

Description of Business Direct marketing business Centered on the operation of Shop Channel, delivering teleshopping through media channels including CATV broadcast, satellite broadcast, internet, and mail-order catalogs.

Subsidiaries and Associated Companies SC Satellite Broadcasting Co., Ltd.

Shop Channel Global Co., Ltd.

Shop Global (Thailand) Co., Ltd.

4. Schedule Date of stock transfer: March 31, 2016 (planned)

This stock transfer is contingent on an approval by the relevant authorities of internal and external competition law, and is scheduled for completion within FY2015.

5. Shareholder of composition (after acquisition) --

J:COM

50% (owned by its SPC)

Sumitomo Corporation

45%

KDDI

LINK:	http://news.kddi.com/kddi/corporate/english/newsrelease/2015/12/24/151...
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