UPDATE 1-DoCoMo, KTF to sell Google phone next year-report

(Adds details, background, company comment)

TOKYO, Nov 19 (Reuters) - Japan's NTT DoCoMo Inc (9437.T) and South Korean partner KTF Co (032390.KS) will jointly develop a smartphone using Google Inc (GOOG.O) software for launch next year, the Nikkei business daily reported on Wednesday.

DoCoMo, Japan's top mobile phone operator, is part of a global alliance to develop phones based on Google's Android platform and has been eyeing a launch in 2009.

DoCoMo owns 10 percent of KTF and the two companies have been jointly procuring handsets to cut costs.

Smartphones, which combine the capabilities of personal computers and mobile phones, have been gaining popularity in Japan, in part led by the July introduction of Apple Inc's (AAPL.O) iPhone.

DoCoMo aims to introduce the Google phone at a price about 20 percent lower than existing smartphones, as it will save costs on software development using the Android software, the report said. Google is offering the software for free.

The new phone would be the first Google phone to be sold by Japanese and South Korean carriers.

A DoCoMo spokesman said the company had not yet decided to launch an Android-based phone next year.

Japan's second-ranked wireless carrier KDDI Corp (9433.T) is also in the Open Handset Alliance that includes Intel Corp (INTC.O), eBay (EBAY.O), LG (003550.KS), Motorola (MOT.N), Qualcomm (QCOM.O) and Samsung (005930.KS).

T-Mobile (DTEGn.DE) has already rolled out an Android-based phone called G1, made by Taiwan's HTC Corp (2498.TW), featuring a tough-senstitive screen, a computer-like keyboard, and Wi-Fi connections.

DoCoMo shares were up 1.5 percent at 160,400 yen as of 0107 GMT, while KTF shares were down 0.9 percent at 27,700 won. Japan's Nikkei average .N225 was down 1.1 percent. (Reporting by Yumiko Nishitani and Sachi Izumi; Editing by Chris Gallagher)