IIJ Announces Acquisition of hi-ho from Panasonic Network Services

Business Wire, March 29, 2007

TOKYO -- Internet Initiative Japan Inc. ("IIJ", NASDAQ: IIJI, TSE1: 3774), one of Japan's leading Internet access and comprehensive network solutions providers, today announced that its Board of Directors resolved to acquire 100% of the equity of hi-ho, Inc. ("hi-ho") from Panasonic Network Services Inc. ("PNS"). hi-ho will become a consolidated subsidiary of IIJ on June 1, 2007.

1. Reason for the share acquisition
IIJ Group will take over the Internet service business that PNS
provides under the "hi-ho" brand and the solution business that PNS
provides to its corporate customers, including Matsushita Electric
Industrial Co., Ltd. group companies through the share acquisition.

While the Internet is becoming more widely used and lower priced
broadband services, such as ADSL and FTTH (Fiber-to-the-home), are
becoming more common in Japan, Internet users are facing more threats
such as cyber-attacks, computer viruses, spam and phishing. As a
result, demand for a safer Internet environment is continually
increasing. Through this acquisition, IIJ plans to expand its Internet
service business by enhancing the development and provision of
high-quality network-related services that consumers can use more
safely, leveraging its engineering and network operating expertise
that it has cultivated in its Internet related business for its
corporate customers.

2. Overview of new consolidated subsidiary (planned)
(1)  Company name: hi-ho, Inc.
(2)  Representative: Koichi Suzuki, Chairman and Representative
                     Director
                     Isao Momota, President and Representative
                     Director
(3)  Location: 2-13-10 Kyobashi, Chuo-ku, Tokyo
(4)  Date of establishment: June 1, 2007 (planned)
(5)  Main business: Internet access service business and corporate
     solution business
(6)  Fiscal year end: March 31
(7)  Number of employees: 46 (estimated as of June 1, 2007)
(8)  Main business locations: Tokyo and Osaka
(9)  Capital: JPY 100 million
(10) Number of shares outstanding: 2,000
(11) Major shareholder and its ownership: Panasonic Network Services
     Inc. 100.0%
(12) Trend of financial results in the recent fiscal year (for
     reference):
     hi-ho, Inc. does not have any financial results for the recent
     fiscal year since it plans to succeed the Internet service
     related business and others of Panasonic Network Services Inc.
     and be newly established on June 1, 2007. The financial results
     related to the business succeeded to hi-ho, Inc. for the fiscal
     year ending March 31, 2007 will be estimated to be revenues of
     JPY 5,468 million, gross margin of JPY 879 million and operating
     income of JPY 284 million. The number of customers in its
     Internet service business is approximately 200 thousand. The
     total shareholders' equity of hi-ho, Inc. upon its establishment
     is estimated to be JPY 556 million.

3. The company from which IIJ is acquiring the shares
(1) Company name: Panasonic Network Services Inc.
(2) Representative: Kenichi Tsunashima, President and Representative
    Director
(3) Location of headquarters: 2-13-10 Kyobashi, Chuo-ku, Tokyo
(4) Main business: Internet connectivity, Internet solutions and
    network service business
(5) Relationship with IIJ: PNS has a transaction with IIJ for Internet
    connectivity services and others. PNS does not have any capital
    and personal relationships with IIJ.

4. Number of shares to be acquired, cost of the acquisition and
   ownership change by the acquisition
(1) Number of shares owned before the acquisition: 0 (ownership: 0%)
    (Number of voting stock: 0)
(2) Number of shares to be acquired: 2,000 (cost of the acquisition:
    JPY 1,200 million)
    (Number of voting stock: 2,000)
(3) Number of shares owned after the acquisition: 2,000
    (ownership: 100%)
    (Number of voting stock: 2,000)

5. Schedule
March 29, 2007 Resolution of the Board of Directors of IIJ
               Close of the share transfer contract
June 1, 2007   New company to be established (planned)
               Transfer of shares (planned)

6. Affect to IIJ's consolidated financial statements
Through the acquisition of shares, hi-ho, Inc. will become IIJ's
consolidated subsidiary. However, the acquisition will not affect
IIJ's consolidated financial results for the fiscal year ending March
31, 2007 since IIJ plans to acquire the shares on June 1, 2007. IIJ
plans to announce its financial target including an affect of the
change on the consolidated subsidiary for the fiscal year ending March
31, 2008 in consideration of the acquisition upon announcement of the
financial results for the fiscal year ending March 31, 2007 in May
2007.

About IIJ

Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI, TSE1: 3774) is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. The company's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design. Moreover, the company has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ was listed on NASDAQ in 1999 and on the First Section of the Tokyo Stock Exchange in 2006. For more information about IIJ, visit the IIJ Web site at http://www.iij.ad.jp/en/.>