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Related Party Transactions

Background of NTT Group and KDDI’s shareholdings

As of June 2023, NTT and NTT Communications together hold 20,387,000 shares of IIJ's common stock which makes the shareholding percentage of 11.1% and KDDI also holds 20,387,000 shares of IIJ's common stock which makes the shareholding percentage of 11.1%. The two groups are equally ranked as IIJ's largest shareholders.

With regard to NTT and NTT Communications, there were the participation of NTT in IIJ's third-party allotment to enhance its capital structure in January 1996 and its third-party allotment mainly to NTT and NTT Communications in September 2003. As of March 31, 2023, the shareholding percentage of IIJ's common stock held by NTT and NTT Communications together was 25.9% and NTT was IIJ's "other related company."

With regard to KDDI, it participated in IIJ's third-party allotment to enhance its capital structure in June 1994. As of March 31, 2023, the shareholding percentage of its common stock held by KDDI was 0.9%.

As a response to the NTT's intent of partial sales of IIJ's common stock, on May 18, 2023, KDDI purchased 18,707,000 shares of IIJ's common stock from NTT with capital and business alliance agreement between IIJ and KDDI. On May 19, 2023, IIJ purchased its treasury stocks and NTT sold 3,928,500 shares of IIJ's common stock. In addition to the above mentioned transaction, NTT executed additional sales. As a result, the two groups' number of shares held and shareholding percentages became as mentioned above and NTT is no longer IIJ's "other related party."

Business relationships with NTT Group and KDDI

In order to provide Internet connectivity services and others, we use services provided by NTT Group and KDDI for a significant portion of access circuits, domestic and international backbone circuits, WAN lines, mobile interconnectivity and facility, data center facilities and other services. The business relationships with NTT Group and KDDI are within the ordinary course of business and there is no special arrangement due to their shareholdings.

NTT Group and KDDI provide services that compete with IIJ services such as Internet connectivity services which include mobile services, WAN services, outsourcing services which include security-related services and systems integration. Although there is competition to a certain extent among IIJ and the two groups in some projects, there are no special arrangements due to their shareholdings, and IIJ Group operates its business independently.

For the fiscal year ended March 31, 2023, IIJ's revenue from NTT Group and KDDI were JPY4.6 billion and JPY0.3 billion, respectively.


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