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DoCoMo hands over $9.8 billion to AT&T Wireless

The Japanese wireless giant does what it promised to do three months ago: fork over $9.8 billion in cash and stock for a 16 percent stake in AT&T Wireless.

Japanese wireless giant NTT DoCoMo on Monday did what it promised to do three months ago: fork over $9.8 billion in cash and stock for a 16 percent stake in AT&T Wireless.

But the duo declined to give specifics on what they planned to do, even though the combination is thought to be of significant import to the wireless industry given DoCoMo's success with wireless services in Japan and AT&T Wireless' large base of customers in the United States.

AT&T Wireless executives said in a statement that the venture will bring "third-generation services like graphic data presentation, video e-mail, high quality music downloads and streaming audio and video to the next generation of mobile technology."

AT&T Wireless will use about $6.2 billion of the cash to expand its footprint, soup up its mobile Internet infrastructure, and invest, according to the statement. The balance of the cash will be used to pay outstanding debt.

An AT&T Wireless spokesman refused to comment beyond the contents of the joint release from the companies.

Ken Heyers, wireless analyst with Cahners In-Stat Group, said the deal is shaping up to be typical of how wireless carriers work in the United States.

"All the U.S. wireless carriers have some ideas about what they hope to accomplish," he said. "But as far as having anything off the ground, they are not there yet. They are still in the strategizing stage. They want to create a buzz."

Ever since the deal was announced in November, analysts anointed the new international venture as being possibly just what the U.S. wireless market needs to catch up technologically to the dominant Asian player.

The most important element, they say, isn't the dollar signs. Instead, it's that AT&T Wireless gets exclusive North American rights to the DoCoMo NTT I-mode brand, which already has more than 15 million customers.

Analysts say the marriage provides NTT DoCoMo a way to float its hugely popular wireless access service into the United States, on the back of AT&T's sprawling wireless network and army of customers.

But where the companies fell short talking about future plans, both sides have revealed much of the financial details of the arrangement.

According to a joint announcement, NTT DoCoMo bought the equivalent of 406 million shares of AT&T Wireless tracking stock, or about 16 percent of the company, for $9.8 billion.

NTT DoCoMo also bought five-year warrants to purchase another 41.7 million shares of AT&T Wireless tracking stock at $35 per share. As a result, AT&T reduced its stake in AT&T Wireless to about 70 percent.

NTT DoCoMo will get a seat on the AT&T board of directors until the AT&T Wireless division goes solo as a company, expected sometime later this year.