Nov. 19, 2013
Jupiter Telecommunications Co., Ltd.
KDDI Corporation
Sumitomo Corporation

Notice on integration of J:COM and JCN

Jupiter Telecommunications Co., Ltd. (head office: Chiyoda-ku, Tokyo; President and Representative Director: Shuichi Mori; “J:COM”) hereby announces that J:COM resolved at its board of directors meeting held on November 19, 2013, to acquire all the shares of JAPAN CABLENET LIMITED (head office: Chuo-ku, Tokyo; President: Yuji Fujimoto; “JCN”*) held by KDDI Corporation (head office: Chiyoda-ku, Tokyo; President: Takashi Tanaka; “KDDI”), and executed a share transfer agreement (“Share Transfer”) with KDDI pertaining to the shares of JCN. Following the Share Transfer, J:COM will integrate JCN.
KDDI and Sumitomo Corporation (head office: Chuo-ku, Tokyo; President and CEO: Kuniharu Nakamura; KDDI and Sumitomo Corporation are collectively referred to as the “Shareholders”) announced on October 24, 2012 and in subsequent announcements that the Shareholders executed a shareholders agreement for joint management of J:COM. The Shareholders also announced their plans to conduct a tender offer for all issued common shares and stock acquisition rights of J:COM, to implement procedures necessary to achieve equal voting rights of 50% each between the Shareholders, and to integrate JCN with J:COM. Pursuant to the agreement, J:COM’s management has advanced to the joint management by the Shareholders. The parties today agreed on the Share Transfer and the integration of J:COM and JCN. The aforementioned Share Transfer is scheduled to be implemented on December 2, 2013 and the parties will proceed with preparation for the merger between J:COM and JCN, which is planned to be completed in April 2014. 
1. Purpose of Share Transfer
The Share Transfer is a step leading to the planned integration of J:COM and JCN, which, in cooperation with the Shareholders, aims to achieve business-scale expansion and service enhancement that will strengthen competitiveness and increase customer satisfaction of the integrated business. The newly expanded entity will, as Japan’s largest cable TV operator, endeavor to contribute to the development of the industry as a whole.
2. Future plans for integration 
As a measure to ensure a smooth integration, J:COM, JCN and the Shareholders have jointly set up an integration steering committee, under which teams and groups have been formed for basic management areas (business strategy, products/media, sales/marketing, technology, personnel/organization, administration) to discuss and work on issues specific to each area. As part of its business plan, post-integration J:COM will continue to maintain its key medium-term objectives: advancing to  a “community service partner”; and transforming itself into a comprehensive media business group by boosting its media content business. At the same time, J:COM will capitalize on JCN’s useful resources, particularly its knowhow developed from years of providing locally oriented cable TV services as well as smart TV connection services. The integration will also benefit J:COM in offering greater opportunities to utilize the wealth of capabilities and resources held by each Shareholder. Major strengths of KDDI that are attractive to J:COM include its “au” labeled products, marketing channels, and research and development capabilities for mobile and landline phone networks. Sumitomo Corporation is likely to be a strong supporter by providing its expertise built from years of operating in the media sector and aiding partnership formation in a wide range of areas, from retail and IT to real estate. By leveraging these benefits from the integration, J:COM will work to enhance its service quality and strengthen competitiveness, thereby achieving sustained growth.
3. Outline of J:COM, JCN, KDDI and Sumitomo Corporation
  • J:COM, established in 1995, is Japan’s largest cable TV operator and is engaged in two businesses, namely, cable network services and program broadcasting. In the cable network business area, J:COM provides an approximate total of 3.8 million households with network connection service for multiple media, including cable TV, high-speed Internet connection, and telephone services through 50 stations run by 11 companies operated in Sapporo, Sendai, Kanto, Kansai and Kyushu. The number of serviceable household or “homes passed” in J:COM franchise areas is roughly 14.06 million. In the program broadcasting business, J:COM operates contents business through holding a stake in and operates 17 thematic channels distributing programs via cable TV, satellite TV and IP multicast platforms.

  • JCN, established in 2001, is currently Japan’s second largest cable TV MSO (multiple system operator). By focusing on broadcasting locally oriented programs in and around the Kanto region via 20 stations run by 20 companies, JCN has contributed to the development of local communities and cultures in the region. JCN currently provides a rough total of 1.25 million households with services including smart TV, cable TV, high-speed connection Internet, and telephone services. The number of serviceable households or “homes passed” in JCN franchise areas is around 4.85 million.

  • KDDI, Japan’s sole comprehensive telecommunications carrier that provides both wired and wireless communication service under the “au” brand, is seeking to create a new telecommunications service model by implementing its “3M Strategy”. KDDI launched its cable TV business in 1998 when it started offering cable-based high-speed Internet connection service using a network held by its subsidiary. Since then, KDDI has expanded its cable TV business by expanding partnerships with cable TV operators, launching a variety of collaborative projects such as Cable-Plus Phone and au Smart Value as well as Wi-Fi and Smart TV Box, with the aim to contribute to the development of the country’s cable TV industry. As of the end of September 2013, KDDI had signed a partnership agreement with 182 cable TV stations run by 96 companies, through which the company provides the Cable-Plus Phone (including J:COM Phone Plus) service to an approximate total of 3.2 million subscriber households. KDDI acquired a stake in JCN, Japan’s second leading MSO in 2006, followed by investment in Community Network Center Inc., the third-ranked MSO, in July 2011, which both represent the carrier’s substantial participation in the management of the cable TV business. KDDI’s involvement in J:COM commenced in February 2010 through the acquirement of capital and, since then, KDDI has worked to support and expand the business of the co-owned firm in cooperation with Sumitomo Corporation.

  • Sumitomo Corporation has been engaged in the media business for more than 25 years within its media, network and lifestyle-related business category. During the past quarter century of promoting and expanding the business, Sumitomo Corporation developed two core areas, namely, the cable TV business and specialized channel operation business for cable and satellite TV broadcasting, by concentrating capital and personnel resources investment in these areas. The cable TV business has expanded by centering on the provision of one-stop-shop based connection service for multi-channel cable TV, high-speed Internet connection and landline telephones. The business was enhanced by the establishment of J:COM in January 1995, which has since been fostered by continued proactive resources investment, driving the growth of Sumitomo Corporation’s cable TV business. The specialized channel operation business, the other pillar of the media business, has also been boosted by organizational and business area expansion. Major related moves include the integration by J:COM of the specialized channel operation business of Jupiter TV Co., Ltd, which Sumitomo Corporation agreed to in September 2007. This was followed by the transfer of the whole ownership of Asmik Ace Entertainment, Inc.(currently Asmik Ace, Inc.) to J:COM in March 2012. 
*On November 1, 2013, Japan CABLENET LIMITED merged with JAPAN CABLENET HOLDINGS LIMITED, with the latter becoming the surviving company and renamed to JAPAN CABLENET LIMITED.

Corporate Communications Department, Sumitomo Corporation
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