KDDI Group Announces Mid-term Management Strategy, "Power-to-Connect 2028"

KDDI CORPORATION

KDDI Group, on May 12, 2026, announced its Mid-term Management Strategy (FY2026-FY2028), "Power-to-Connect 2028."

To date, our group has refined its role as a social infrastructure provider and has continued to achieve business growth centered on telecommunications, optimizing the value of communications in line with the evolution of mobile communication technologies.

In the coming "AI-Native Society," where AI will be widely integrated as a social infrastructure, we will shift from an era of using AI to an era where AI is embedded. While technology brings efficiency and sophistication, AI itself will rapidly become commoditized, and "AI-resilient and hard-to-replace value" will lead to differentiation.

We aim to become a front-runner in social implementation by creating new businesses that support "AI-Powered Productivity," contributing to our customers' business growth, and "AI-Enhanced Lifestyles," transforming daily life and experiences.
These initiatives are designed to deliver tangible value that customers can clearly experience in their everyday lives.

Our real-world assets, such as our customer touchpoints including au Style/au shops and LAWSON stores nationwide, our infrastructure including base stations deployed across the country, and our human resources with diverse skills and experiences, are significant strengths that are difficult for AI to replace.

To leverage these strengths and further differentiate ourselves, we propose "Fusion," a value creation model through cross-domain fusion, as a new growth structure to strengthen and create businesses.

Specifically, at its core is "Real-Tech Fusion," which creates customer experience value by combining the strengths of real-world assets with technology. This is supported from the foundation by "Infrastructure Fusion," which aims to build the next-generation digital infrastructure by fusing conventional communication infrastructure with new AI infrastructure. "HR Fusion" will act as the driving force, fostering next-generation talent by bringing together the skills and experience of diverse professional human resources.
Through the Mid-term Management Strategy "Power-to-Connect 2028," KDDI Group will achieve sustainable growth for the entire group and further enhance its enterprise value.

■Mid-term Management Strategy "Power-to-Connect 2028"

1. New Value Creation Model: "Fusion"

(1) Core of Value Creation: Real-Tech Fusion

The core of our value creation lies in "Real-Tech Fusion," which combines the strengths of our real-world assets, which are difficult to replace by AI, with technology. We will transform customer experience by leveraging technology and focus on differentiation unique to the real world. By bringing together the power of a solid infrastructure (Infrastructure Fusion) and the human resources who master it (HR Fusion), we will create and implement customer-centric experiential value in society.

[1] AI-Powered Productivity supporting corporate business growth

• We will promote the social implementation of physical AI, which combines physical domains such as robotics with AI, and contribute to the business growth of companies.

[2] AI-Enhanced Lifestyles transforming daily life and experiences

• We will provide lifestyle intelligence utilizing real-world touchpoints such as au Style/au shops and LAWSON stores to transform the daily lives of each and every customer.
• We will provide a variety of services centered on communications to enhance the customer's experience value.

(2) Twin Pillars Supporting Value Creation

[1] Infrastructure Fusion

"Infrastructure Fusion" supports the foundation of Real-Tech Fusion. As a symbol of this infrastructure strategy, "Digital Belt Initiative" aims to build a "nationwide low-latency network and AI computing resource infrastructure" that covers the land, sea, and air across Japan by integrating the conventional communication infrastructure and the new AI infrastructure. We will design and study this with a long-term perspective toward around 2040 and concentrate our management resources on it.

Land	In addition to the existing data centers (Sakai, Miyazaki, Tama, Oyama), we will proceed with the construction of new bases, starting with Kansai region, connected by all-optical networks.
Sea	As AI responsiveness becomes more critical, we will leverage Japan's geographical advantage of connecting Asia and the United States in a straight line to promote the installation and maintenance of high-capacity, low-latency optical submarine cables.
Air & Space	Regarding communications between Earth and space, which are increasing in importance with the development of the space industry, we will expand our Power to Connect into outer space.

[2] HR Fusion

"HR Fusion" is what drives the execution of Real-Tech Fusion. We will promote the evolution of existing network engineers and frontline personnel into "dual-skilled talent" who will be responsible for social implementation, by acquiring new technology expertise (added skill development) and "enhancing sales capabilities with AI" through practical experience at our group companies in Japan and overseas.
By expanding the capabilities of network engineers to handle new domains, KDDI Group will build a structure of 3,000 AI personnel and 2,000 cyber security personnel. Furthermore, several thousand customer-facing personnel will also be transformed into professionals who create new customer experience value by making full use of technology. Through these initiatives, we will foster a corporate culture that continues to generate innovation.

2. Three Business Segments

To translate the value created by Fusion into concrete business growth, we have redefined our business segments into the following three areas.
By reinvesting the stable profits and investment capital generated by our core business, "Telecom Core Segment," into "Personal Growth Segment" and "Business Growth Segment," which drive high growth, we will accelerate the growth of the entire group.
Furthermore, we will create a virtuous cycle between segments, such as services in Growth Segments enhancing customer engagement and reducing the churn rate of Telecom Core Segment.

(1) Telecom Core Segment

• In Telecom Core Segment, which is responsible for the core of our business, telecommunications and infrastructure, we will promote structural reforms with an emphasis on LTV (Lifetime Value) and pursue stable growth in mobile revenues and operating income.
• Furthermore, we will thoroughly improve operational efficiency through the proactive use of AI and transform our structure into a lean and mean profit structure, thereby creating the investment capital that will be the source of the entire group's growth.

(2) Personal Growth Segment

• In Personal Growth Segment, which will form the foundation for AI-Enhanced Lifestyles, we will accelerate initiatives to create new business models in the areas of finance, energy, devices, and Ponta Pass/Lawson.
• In the global domain, we aim to roll out knowledge and success models gained in Japan to overseas markets.

(3) Business Growth Segment

• In Business Growth Segment, which will form the foundation for AI-Powered Productivity, we will accelerate growth in the areas of AI integration and cybersecurity by capturing opportunities such as AI utilization needs and regulatory changes.
• In the areas of Connected Solutions and Data Center, we will aim for both high value-addition and stable growth as the next digital infrastructure.
• In AI-BPO, we will drive customer experience improvement and corporate business transformation by making full use of AI.

3. Management Foundation

Our company has a management foundation that drives Fusion, built on a strong group governance that supports customer trust, including the customer base, data infrastructure, and partnering capabilities we have cultivated.
In the Mid-term Management Strategy, we will further strengthen this management foundation and enhance our ability to execute value creation. Specifically, we will work on initiatives such as advancing research and development that creates the future and evolving start-up co-creation to build a robust system that supports our sustainable growth.

4. Financial Targets

To further enhance enterprise value, we will focus on sustainable growth and quality improvement.
For sustainable growth, we aim for a 5% compound annual growth rate (CAGR) in operating income through the sustainable growth of the "Telecom Core Segment" and double-digit growth in the "Growth Segments."
For quality improvement, in addition to leveraging for growth investments and disciplined growth investments and business portfolio review, we will use ROE and ROIC spread as management indicators to enhance execution capability.
Regarding capital allocation, we will be more conscious of capital efficiency and execute return-based capital allocation based on stable dividend growth. For shareholder returns, we will continue stable dividend growth aligned with business growth (payout ratio over 40%; on an adjusted profit for the year basis) and implement flexible share buybacks while comparing them with growth investments.
In addition, we will control our traditionally strong efficient capital investment, keeping CAPEX to Sales ratio at 12.0% or less.

In addition, KDDI Group has established a new brand message, "Spark Your Journey."
With all the technology and quality that KDDI Group possesses, we will support the challenges of each and every customer and help them to create a future where they can shine in their own way.
Through these initiatives, the entire group will take on the challenge of realizing "KDDI VISION 2030: The creation of a society in which anyone can make their dreams a reality, by enhancing the power to connect."