1996-011                                                     June 13, 1996

KDD has agreed on a business tie-up with the French-based GEMPLUS Company (head office: Gemenos, France; president: Marc Lassus). The GEMPLUS Company holds the top-ranking share throughout the world in the IC-card producing industry.

Under the agreement, KDD will collaborate with the GEMPLUS, which has manufacturing centers and sales networks around the world, in joint marketing and sales activities for IC cards in Asia, exchange of personnel (e.g., employee leases between the two companies), and conclusion of a distribution contract.

The collaboration will enable the two companies to share know-how on IC cards, realize new telecommunications services, and develop and sell products based on such KDD- developed technologies as IC Card security systems.

The GEMPLUS Company's Japanese corporate wing, the Gemplus Japan Co., Ltd. (head office: Chiyoda-ku, Tokyo, president: Thian Yee Chua), and KDD's subsidiary, OSI Plus Co., (head office; Meguro-ku, Tokyo, president: Hiromichi Mori), will handle the actual operations. After signing a distribution contract for GEMPLUS' IC cards and related products, the two companies will jointly market the products in Japan and other Asian countries.

Compared to conventional magnetic strip cards, IC cards are much superior in utility due to their ability to hold more information and adapt to special specifications. Consequently, IC cards can be used for a wider range of applications than can magnetic strip cards. At the same time, IC cards are believed to be an effective countermeasure against forgery. The field of telecommunications already sees worldwide use of IC cards as SIM (Subscriber Identity Module) cards for use in portable telephone terminals and in telephone cards used in public telephones. Yet, IC cards are expected in future to enjoy a dramatically expanding widespread currency and use in an extensive range of areas outside telecommunications, such as commercial credit cards, all types of ID cards, cards for use in bank ATMs, electronic money, and so forth.

Indeed, KDD has already introduced the IC card in the form of a prepaid card for use in "001-IC Global Phones," a telephone facility exclusively for international calls and devoted to making international direct dialing available even more economically. Not only this, but KDD's experimental research is also bringing about developments in Internet security systems that employ IC cards. The present business tie-up represents a determination on the part of the two companies to pool their respective technological prowess and thereby set about expanding the scope of IC card applications and working toward the promotion and diffusion of sales both in Japan and other regions of Asia.