KDDI’s new CEO takes on AI-fueled growth mantle

One indication of how seriously KDDI takes AI is the new AI data centre it is building in Japan, which it claims will be Asia’s largest. Speaking to journalists at MWC 2025, KDDI’s incoming Chief Executive Hiromichi Matsuda explained that the infrastructure investment is part of a multi-layered approach to AI that is at the heart of the operator’s growth strategy beyond connectivity services and into “non-telco” businesses.

Japanese telcos have been looking to diversify to offset a sharp drop in ARPU over the last five years in a highly competitive market. The major factors were political pressure to reduce mobile consumer prices and the arrival of Rakuten. This has taken KDDI into retail and the owning and running of 14,600 convenience stores, which it acquired from Lawson last year, as well as energy.

Construction will start soon on the new AI data centre in Sakai, Osaka, and it is expected to be operational by the end of March 2026. The facility will house NVIDIA’s latest Blackwell GPU architecture. When the plan was announced in June 2024, the assumption was that NVIDIA would supply an estimated 1,000 units of its GB200 NVL72 liquid-cooled, rack-scale system, which underpinned claims to being the region’s biggest AI data center.

The data center is “one big piece” of KDDI’s AI strategy, which has three layers, starting with infrastructure at the base, large language models (LLMs) in the middle and AI applications “on top of that,” said Matsuda, who will take up his new role as CEO on 1 April.

Matsuda is currently Managing Executive Officer, Director, and Chief Digital Officer and joined KDDI in 1996. He replaces current CEO Makoto Takahashi, who has been appointed Chairman of KDDI.

“We see the AI data center as fundamental infrastructure in Japan…We need to secure a lot of computing resources, which is also a request from our government. That’s why we decided to invest in the data center for a four years’ commitment,” said Matsuda.

But the project is not expected to increase the operator’s capex. Instead, what is changing is the ratio between telco and non-telco investment, Matsuda explained.

“We can increase the efficiency of investment on the telco side and put that portion into the non-telco side, like the AI data center, and keep the total capex as it is now,” he said.

Japan has been a hotbed for AI-fueled infrastructure investment. Microsoft has announced plans to invest $2.9 billion in AI and cloud infrastructure, while AWS has said it will invest $15 billion to expand its existing cloud infrastructure in the country, for example.

KDDI telco rivals are also active. NTT recently said it will join forces with TEPCO Power Grid Inc. to jointly develop and operate data centers in Greater Tokyo, while Softbank is building data centers in collaboration with NVIDIA.

AI’s gravitational force

The operator has put AI, data and 5G at the center of its “Satellite Growth Strategy” and they are “like the sun”. They provide “the gravity between the telco and adjacent business segments…everything should be related to the telco,” he explained.

In the satellite-themed vision, there are two orbits around the tech trio of AI, data and 5G. The first orbit closest the “sun” comprises the telco’s businesses in the areas of digital transformation, energy and finance.

The second, outer orbit consists of new “life transformation” growth segments, including healthcare, mobility, space and sports entertainment.

Matsuda said KDDI has been applying AI technology in multiple ways across the organization. In one of the first priorities, the operator had adopted AI in its customer care centers, where AI chatbots can handle half of incoming calls.

The operator is also using the technology to “improve network engineering efficiency”, he said.

Furthermore, he said the operator is now working on “how to increase the value to the customer, especially the enterprise customer.”

Here, KDDI is creating solutions under a business platform, called WAKONX (“WAKON-cross”), which was unveiled in May 2024 to provide AI services tailored to industry needs. For example, the operator is developing AI-based recommendations through digital signs in the Lawson retail shops.

The enterprise platform comprises network, data and AI application layers. Underpinning the proposition is the operator’s global infrastructure, including 45 Telehouse-branded data centers in 20 countries, as well as the new AI data center in Japan.

The operator is also looking to make money from its existing network assets by exposing network APIs as well as by continuing to lease capacity to Rakuten. KDDI joined the Ericsson-led Aduna joint venture as an equity partner, bringing the total number of operators involved to 13.

“The network team are always thinking about cost reduction, but we also urge them to grow the revenue with their network asset,” he said.

To differentiate its mobile connectivity, KDDI plans to launch Starlink direct-to-cell services this spring. It already uses Starlink for satellite backhaul, emergency disaster recovery, and providing connectivity on ferries. Direct-to-cell marks the next phase of their partnership.

Keeping an eye on sustainability

When asked about the impact of the potentially power-intensive AI data on its sustainability goals, Matsuda said the operator is working on getting the “balance” right.

“[AI model] training consumes more power, and so we think about the balance between the training and inference in our new AI data center,” he said.

He also pointed out that KDDI’s energy subsidiary, au Energy Holdings, is developing solar power plants in Japan. KDDI will be able to buy renewable energy from its subsidiary to power its networks and data centers.