KDD is leading the world in providing state-of-the-art telecommunications services, maintaining huge-capacity and high-quality optical fiber networks extending nationwide and worldwide, such as the optical undersea cable loop surrounding Japan (JIH), optical fiber networks laid down along with major highways in Japan, and international submarine cable networks. Hewlett-Packard Japan ("HP Japan"), on the other hand, is a Japanese subsidiary of HP, the world's second largest computer company, developing the advanced solution business based on its open-system technology and world-wide network of product support services.

Considering the increasing demand for establishing economical and efficient information infrastructures based on the latest IT (Information Technology), the two companies, by forming a business alliance, will integrate KDD's know-how and resources as a telecommunications carrier with HP Japan's enhanced computer systems technologies, to develop and provide highly value-added solution services corresponding to varied customer needs in specific industries.

The alliance includes the following activities:

(1)

In accordance with the current trend of network and computer integration achieved by the prevailing use of the Internet technology, KDD and HP Japan will advance toward joint development/provision of specific solutions for respective industries. To begin with, the companies will proceed to develop an EDI/EC Solution (Note 1) which supports supply-chain management for the distribution industry, as well as developing new solutions including applications in the field of ERP (Note 2) for the industry. In addition, they will endeavor to develop an Internet Financial Retail Solution (Note 3) for the financial and credit card industries.

(2)

KDD will make use of HP's networked points of presence throughout the world for the provision, operation and maintenance of customer premises equipment, while HP Japan as KDD's agent will propose a combination with KDD's leased circuits, frame relay or other network services when offering its products or solutions to its customers. This will enable both companies to cooperate with each other in providing support for installation, operation, and maintenance of customers' global telecommunications networks.

(Note 1)	EDI/EC Solution: To establish a system for trading of products, making use of electronic media such as the Internet. The EDI/EC Solution for the distribution industry provided by the companies this time is a package of services including systems consultations, housing of outsourced facilities, and EDI Service to deliver low-cost means of promoting efficiency in taking/making orders for ERP-based companies.
(Note 2)	ERP (Enterprise Resource Planning): A new type of packaged software which encompasses the entire chain of information processing functions of the enterprise including marketing, production, accounting, etc.
(Note 3)	Internet Financial Retail Solution: A system by which financial institutions provide end users with itemized statements of service utilization and options to make change of address or other modifications through the Internet.