AT&T; Sells NTT DoCoMo 16% of Wireless Business for $9.8 Billion

NEW YORK —  AT&T; Corp. is selling 16% of its wireless business for $9.8 billion to NTT DoCoMo, Japan’s top mobile phone company, giving AT&T; new funds and a savvy partner in the drive to deliver mobile Internet services.

The widely expected deal announced Thursday gives NTT DoCoMo access to the rapidly growing U.S. wireless phone market while providing AT&T; with cash to help reduce its massive debt.

AT&T; also disclosed Thursday that it has decided to upgrade its wireless network with the global system for mobile communications, or GSM, cell phone technology used throughout Europe and Asia.

The move to the GSM standard is designed to accelerate the transition to next-generation wireless technologies, including DoCoMo’s wildly successful i-mode platform for wireless Internet services.

For AT&T;, the agreement comes at a crucial time. The company is trying to pay off some of its $62-billion debt as it prepares to break itself into three independent entities.

AT&T; also hopes to share in the huge bounty that i-mode has brought to DoCoMo since its introduction only a year ago.

Nearly half of DoCoMo’s 30 million mobile phone customers subscribe to the i-mode service.

I-mode customers can talk, play games, read the news, and send and receive e-mail on their mobile phones. DoCoMo is a subsidiary of NTT Corp., the world’s second-largest telecom firm.

The stake in AT&T; Wireless marks the first U.S. investment by NTT DoCoMo, which has been looking to extend the success of i-mode to other markets.

Under terms of the deal, DoCoMo is paying $20.50 per share for preferred AT&T; stock that is convertible to AT&T; Wireless shares once the wireless group is spun off under the plan announced last month.

AT&T; shares rose 63 cents to close at $19.63 on the New York Stock Exchange, where shares of AT&T; Wireless rose 13 cents to close at $18.