Fusion to Relaunch on July 1

Fusion Communications Corporation and PoweredCom, Inc. will merge their telephone businesses on July 1 based on a final merger agreement signed on March 25.

This merger in telephone services aims to establish a leading company in IP telephone services and other voice communication services. Fusion will utilize the fiber optic networks owned by PoweredCom and other power-company-related carriers and apply its own IP-phone know-how to provide a wide range of advanced services.

An outline of the merger is provided below.

Reason for Business Merger and Profile of Fusion After Integration

1. Reason for the Merger

The voice communications business was founded on fixed-line telephone service, but the spread of mobile phones and the use of IP telephone services based on a rapid spread of broadband Internet connections have brought about a major turning point in the marketplace. Due to the lower fixed-line traffic in this environment, NTT East and NTT West have raised their access charges, strongly impacting the profits of interconnecting phone carriers.

PoweredCom and Fusion mutually recognized the need to quickly establish a system for providing next-generation services in response to these market changes as a key strategy for taking the lead in the voice communications market in the future. The two companies thus decided on a merger in telephone services to make most effective use of the management resources of both companies. That merger of telephone services takes place on July 1, 2004.

Fusion was the first company in Japan to build an IP telephone network and provide IP telephone services. PoweredCom is a power-company-related carrier that owns extensive fiber optic infrastructure, primarily in the Tokyo area. The merger of personnel, customers, and financial infrastructure is designed to boost competitiveness by taking full advantage of the fiber optic network to create a leading voice communication services company in a new age of "Everything over IP."

2. Profile of Fusion After Integration (as of July 1, 2004)