Cadira has maintained an ongoing dialogue with KDDI Corporation (hereinafter “KDDI”). Our CIO, Mr. Shimizu, has built a relationship with the company since his previous role. We value KDDI’s consistent openness to investor input and its sincere willingness to engage with even the most critical feedback.
In recent years, we have focused on the stagnation in new business development and a decline in employees’ “spirit of challenge,” and have encouraged efforts to revitalize the corporate culture. We understand that the selection of KDDI’s new executive leadership in 2025 was aligned with the themes we have emphasized through our dialogue, and we welcome the outcome.
As signs emerge that the company is beginning to shift away from a more conservative management stance, Cadira remains committed to engaging with KDDI—with a sense of renewed optimism for the future.
Company Overview
KDDI is one of Japan’s leading telecommunications companies, alongside Nippon Telegraph and Telephone (NTT) and SoftBank. Through its core brand “au,” KDDI offers both mobile and fixed-line telecommunications services, making it one of the country’s top integrated telecom operators. Leveraging its communications business as a foundation, the company has also expanded into a range of “Life Design” services, including finance, energy, entertainment, and education, in pursuit of sustainable growth.
KDDI was formed on October 1, 2000, through the merger of three companies: Daini Denden (DDI), Kokusai Denshin Denwa (KDD), and IDO. This integration created Japan’s first full-scale telecom operator offering fixed-line, international, and mobile services under one roof. The company’s roots trace back to the founding of DDI in 1984, led by Kazuo Inamori, who also founded the electronic components manufacturer Kyocera. Inamori established DDI to introduce private-sector competition into what had been a government-dominated telecom industry, driving deregulation as a pioneer of liberalization in Japan’s communications market. The subsequent merger with KDD, which specialized in international communications, and IDO, a mobile provider affiliated with Toyota, resulted in the creation of KDDI.
Since the 2000s, KDDI has expanded primarily through its “au” mobile brand. In recent years, it has broadened its business portfolio to include finance, energy, and entertainment, positioning itself as a “Life Design Company” rather than a conventional telecom operator.
The Social Role of Telecommunications Companies
Telecommunications services are already essential infrastructure for daily life, and their importance is expected to increase further as they are applied in more diverse areas. Maintaining a high-quality communications environment is a business of great social significance. Given the deep integration of smartphones into daily life, disruptions in connectivity can cause significant inconvenience. Looking ahead, as more autonomous systems—such as self-driving vehicles—rely on constant connectivity, the risks associated with communication failures will rise, potentially leading to serious accidents. This further underscores the growing importance of maintaining communication quality.
KDDI positions its mission as “connecting people and things” and has been working to improve service quality. Although the company experienced a major service outage in July 2022, it has since taken corrective steps, including collaborating with competitor SoftBank to introduce a backup line service using SoftBank’s network. In April 2025, KDDI also began offering satellite communication services through a partnership with SpaceX, utilizing the low-earth orbit broadband network “Starlink” to enable smartphone connectivity without dedicated satellite antennas.
Shifting Business Environment
Since around 2018, telecom fees in Japan have been on a downward trend, driven by government policy. For KDDI, this has resulted in revenue losses of up to ¥100 billion annually. According to a 2025 report by the ICT Research & Consulting (ICT Souken)*¹, telecom fees in Japan, once relatively high by global standards, have fallen significantly since 2021. As of March 2020, the average monthly mobile fee for 2GB of data across six countries—Japan, the U.S., U.K., France, Germany, and South Korea—was ¥3,817, with Japan at ¥4,021 (5.3% above average). By December 2024, the average had dropped to ¥2,770, while Japan’s average was just ¥1,312—52.6% below the global average.
A separate January 2024 report by ICT Souken*² concluded that Japan’s mobile data speeds are in line with international averages, indicating that Japan offers world-class telecom infrastructure at some of the lowest prices globally.
Recently, the Japanese government has shifted its policy focus from price competition to value-added competition, encouraging companies to raise wages and move away from deflationary pressures. As such, continued price cuts in telecom services are increasingly seen as incompatible with broader economic objectives. Telecom companies, facing rising labor and energy costs, have begun voicing concerns that prolonged low pricing could hinder innovation. Accordingly, the downward pressure on per-gigabyte pricing may be easing, while rising data consumption is likely to push average per-user telecom fees higher going forward.
Cadira’s Engagement
Cadira has engaged in ongoing dialogue with KDDI. Our CIO, Yu Shimizu, has been in discussion with the company since his previous role, fostering a long-standing relationship. KDDI has consistently demonstrated openness to investor input and has shown a commendable willingness to seriously consider even critical feedback. In past engagements, we have made several recommendations—such as increasing the company’s involvement in renewable energy generation, differentiating its e-commerce business, and fostering a stronger culture of innovation among employees.
For example, although KDDI operated an electricity retail business for consumers, it initially did not consider electricity generation to be within its business scope. We suggested that, from both a risk mitigation and growth perspective, it should consider entering the power generation sector. In response, the company has since established a subsidiary to pursue renewable energy generation.
From a cultural standpoint, we noted that around 2020, the company’s expansion into new initiatives had slowed, mirroring a trend of homogenization across the industry. Internal employee surveys also indicated a decline in the “spirit of challenge.” We flagged this as a concern and asked the company to share its countermeasures.
In April 2025, President Matsuda assumed leadership of KDDI and emphasized the word muchū (“total engagement” or “enthusiastic focus”) as a core message of the new management team. He stated his vision of making KDDI a company where every employee can passionately pursue challenges. We understand that changes in company culture were likely considered in the selection of the new leadership, and that investor feedback may have played a role in this process.
Since taking office, President Matsuda has already announced new initiatives—such as the aforementioned Starlink-based satellite service—that differentiate KDDI from its peers. These early steps suggest the company may be shifting away from its conservative stance and toward revitalized management. At Cadira, we continue to engage with KDDI and look forward to further dialogue, with a sense of renewed optimism.
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