The Kansai Electric Power Company
has announced the forthcoming merger of K-Opticom Corporation (K-Opticom)
and Osaka Media Port Corporation (OMP), both of which are group
companies in the IT/Communications business. As we approach an agreement
regarding purchase of OMP's stock from Osaka City and three other
shareholders, we intend to move first towards wholly owning OMP
and then to work towards a target date of December 1st for an eventual
Our group is developing a total
IT/Communications business with local and IP concentration. K-Opticom
has been providing individual services with its optical fibre network
mainly in residential areas, while also offering corporate data
communications services including IP-VPN which take advantage of
the merits of IP networks.
At the same time, OMP has been
delivering corporate services with its optical fibre network which
has been built mainly in commercial centers. In addition to its
reliable dedicated line service, OMP is in the process of developing
an Ethernet service which will work with network-type services.
We expect a roughly 3
billion/year cut in capital expenditures and a 1.5
billion/year cut in costs on a group basis through the merger.
In sales, we will be able to offer
a greatly broadened lineup of service for corporate users, including
K-Opticom's high-quality IP-VPN service and OMP's low-cost Ethernet
service. This will enable us to offer a total solutions service
for both corporate and individual customers combined with K-Opticom's
existing individual services (including high-speed FTTH and low-cost
wireless (PHS) data communication).
We expect the new company to show
profits in the fiscal year ending March 2005 and to erase accumulated
losses by the fiscal year ending March 2007.