Internet Initiative Japan to Acquire Domestic Networking Operations in Japan from At&T

AT&T* and Internet Initiative Japan Inc. (NASDAQ:IIJI) announced today an agreement for IIJ to acquire AT&T Japan’s operations focused on domestic Japanese outsourcing services, including approximately 1,600 domestic Japanese business customers and approximately 250 AT&T employees who support these customers. AT&T, through its existing local entities, will continue to serve the global needs of multinational corporations (MNCs) with operations in Japan.

Today’s agreement reinforces AT&T’s strategic focus on providing managed global connectivity and application services for MNCs and complements IIJ’s strategy of expanding its portfolio of domestic services and customer relationships.

AT&T will continue to maintain a strong presence in Japan, including substantial operations and employees dedicated to AT&T Global Network infrastructures in Japan. The sale does not involve AT&T’s infrastructure in Japan, which includes four global network service nodes, remote access infrastructure for corporate clients, an Internet Data Centre and significant international subsea cable capacity. In addition to managed global connectivity services, AT&T’s retained business in Japan also provides an advanced portfolio of value-added services such as hosting, mobile enterprise applications, cloud computing, application management, security, Telepresence and unified communications.

"Japan is one of the top destinations for our multinational clients and remains an important market for AT&T. We intend to maintain a strong presence in Japan, but it makes strategic sense for us to sell our domestic customer base and supporting operations in Japan to IIJ,” said Bernard Yee, vice president AT&T Asia Pacific. "The sale will enable AT&T to focus on its core strength — providing global managed connectivity and application services to multinational corporations that operate on a global basis.”

In conjunction with the agreement, AT&T has established a new subsidiary to ensure the smooth transition of customers, employees and business operations to IIJ. After the transaction closes, this new company will become a wholly-owned subsidiary of IIJ. AT&T intends to continue to sell domestic telecommunication services, including IIJ products, to the MNCs it serves that have operations in Japan. And the new company intends to purchase global connectivity services from AT&T to support its Japan-based customers’ global communications needs.

The sale price is approximately ¥9.2 billion, or approximately US$100 million, based on the exchange rate on May 31, 2010. Full-year revenues from the domestic Japanese outsourcing business are estimated at approximately US$300 million for 2010. The companies are targeting completion of the transaction on September 1, 2010.

Contingent upon the close of the transaction, AT&T intends to exercise a call option on NTT's 15-percent stake in AT&T Japan.

*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

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