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KDDI said revenue from AI integration and cybersecurity increased 19.2% year-over-year in the first quarter of fiscal 2027
In sum – what to know:
AI growth – AI integration and cybersecurity revenue rose 19.2% y-o-y, while KDDI iret reported threefold growth in new AI projects.
Data centers – Connectivity data center revenue increased 20.6%, with EBITDA growing at a similar rate and its margin exceeding 40%.
JPY1 trillion – KDDI plans JPY1 trillion of growth investment over three years, including physical AI, cloud businesses and applications.
Japanese carrier KDDI is stepping up its focus on AI integration, cloud infrastructure and data centers, with the company reporting strong growth across these businesses and outlining a JPY 1 trillion ($6.27 billion) growth investment framework over three years.
The Japanese operator said revenue from AI integration and cybersecurity increased 19.2% year-over-year in the first quarter of fiscal 2027. Cloud infrastructure revenue increased by more than 30% year-over-year, while its connectivity data center business reported 20.6% growth in operating revenue.
“A secure cloud environment is a prerequisite for AI implementation, and we leverage the Group’s strength to accelerate implementation support,” KDDI senior managing executive officer and chief financial officer Nanae Saishoji told a conference call with investors.
“Connectivity data center is capturing AI inference needs with Q1 operating revenue growing a solid 20.6% year-on-year. EBITDA also grew similarly year-on-year, with the EBITDA margin exceeding 40%. We will continue to capture growth opportunities accompanying the spread of AI,” the executive said.
KDDI said its AI-related growth is also being reflected in project activity. Hiroaki Hosoi, managing executive officer and executive director of the business core division, said the company had seen strong demand following the launch of its new KDDI iret business in April.
“With regards to AI Integration, from April, we have the new KDDI iret, and we are able to capture very aggressive demand,” he added.
Hosoi also said KDDI expects continued expansion in cloud infrastructure, noting that its cloud business had traditionally been centered on AWS but was now expanding to Google, Oracle, and Microsoft.
The company is also preparing for further investment in AI and related growth businesses. Tomohiko Katsuki, managing executive officer and CSO, said KDDI’s AI investment can be divided into organic capital expenditure and longer-term growth investment.
KDDI also said its AI growth investment includes “physical AI and other different types of cloud businesses..”
The carrier has already pointed to corporate adoption of its AI data center in Sakai. Katsuki said there were multiple corporate customers at the facility, including companies involved in self-driving.
For the first quarter, KDDI reported operating revenue growth of 5.1% year-over-year and adjusted operating income growth of 21.1%. Adjusted net income increased 21.6%, while the company maintained its full-year operating revenue forecast of JPY 1.21 trillion.
In May, KDDI had outlined a new three-year strategy centered on artificial intelligence, infrastructure expansion, and future 6G readiness as the telco prepares for what it describes as an “AI-native society.”
The strategy covers the period from April 2026 through March 2029 and follows the completion of KDDI’s previous midterm plan, which included investments in network infrastructure, AI-enabled customer engagement initiatives, and the acquisition of a 50% stake in Japanese convenience store chain Lawson.
The operator said its new plan is designed around the expectation that AI will become increasingly integrated into daily life rather than remaining a standalone technology tool.
A central component of the plan is the “digital belt” initiative, which includes the expansion of low-latency transport and access networks, AI data center infrastructure, satellite ground stations, and subsea cable landing facilities.
