Related Party Transactions

Background of investment by NTT Group and KDDI

As of this document's filing date, NTT and NTT Communications together hold 20,387,000 shares of IIJ's common stock and 11.5% of the voting rights and KDDI also holds 20,387,000 shares of IIJ's common stock and the voting rights of 11.5%. The two groups are equally ranked as IIJ's largest shareholders. IIJ Group procures telecommunication lines and others from both NTT Group and KDDI and competes against them mainly in network services.

With regards to NTT and NTT Communications, there were the participation of NTT in IIJ's third-party allotment of shares to enhance our capital structure in January 1996, establishment of INTERNET MULTIFEED CO. with NTT in September 1997 (later, the shareholder changed to NTT Communications due to reorganization of NTT Group), and IIJ’s third-party allotment of shares mainly to NTT and NTT Communications, in September 2003 in order to offset the financial losses due to commencement of corporate reorganization proceedings of Crosswave, our former equity method investee. As of March 31, 2023, the shareholding percentage of our common stock by NTT and NTT Communications together was 25.9% and NTT was our “other related company.”

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

As a response to the NTT's intent of partially selling 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 stock through off-auction own share repurchase trading (ToSTNeT-3) of the Tokyo Stock Exchange 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 the shareholding percentage became as mentioned above and NTT is no longer our “other related company” and our related party under International Financial Reporting Standards (IFRS).

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 our 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, 2024, our revenue from NTT and NTT Communication and KDDI were JPY0.3 billion and JPY0.3 billion, respectively.