The partners plan to invest 200 billion yen (63 billion baht) over 10 years on building up the telecom infrastructure in the country where only 15% of the population has access to mobile phones.
The Myanmar government plans to raise the cell phone access ratio to 80% by 2016.
"We have entered what could be called the last rapidly growing market," said Yuzo Ishikawa, senior vice president of KDDI, at a news conference in Tokyo. "With our telecommunications infrastructure, we hope to greatly contribute to the development of Myanmar's economy."
The joint venture will combine the Myanmar telecom company's customer base and existing network infrastructure with the marketing and technological expertise as well as funds to be provided by KDDI and Sumitomo, according to the Japanese companies.
Mr Ishikawa said he hopes to capture the highest market share in the Myanmar market in several years.
KDDI will be the first Japanese mobile phone operator to enter Myanmar's telecommunications sector after the country opened up its telecom market to foreign capital last year.
Norway's Telenor and Qatar's Ooredoo obtained mobile operating licenses after an international bid in June last year. They plan to start services this fall.
Ooredoo said it plans to invest up to US$15 billion (481.5 billion baht) in 15 years, while Telenor has not disclosed details of its plan other than to say it aims to cover 60% of the population in the first year and 95% in the following five years.
Seeing no further room for strong growth in Japan, KDDI and Sumitomo, a trading house, are setting their eyes on emerging economies.