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 merger.

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.