Updated from 11:28 a.m. EST

Dan Hesse has resigned as president and chief executive of

AT&T's

(T) - Get Report

wireless services unit to take over a Seattle Internet start-up.

Widely credited with building a cohesive wireless business for AT&T after starting with fragmented business plans and technology in 1997, Hesse will be replaced by Mohan Gyani, board member and head of corporate strategy at

Vodafone AirTouch PLC

(VOD) - Get Report

, AT&T said Thursday.

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Hesse will become the president and chief executive of Seattle-based

TeraBeam Networks

, a privately held company that is developing wireless and fiber-optic network components.

Hesse's departure comes just weeks before AT&T is slated to sell as much as 20% of the wireless services division's parent,

AT&T Wireless Group

. The initial public offering is expected to be valued at $8 billion to $10 billion, and will most likely be the largest initial public offering in history.

The 46-year-old wireless chief stood to make as much as $50 million, by some estimates, from the IPO through stock options. His departure is largely seen as a reaction to getting overlooked in the company's selection of a chief executive for AT&T Wireless Group. AT&T President John Zeglis was appointed to the post.

Hesse's move to TeraBeam comes at an opportune time for that venture. The start-up has been working on its new technology in relative obscurity, but plans to make a public announcement this weekend at the

PC Forum

conference in Scottsdale, Ariz.

AT&T's stock closed down 3/8, or 1%, at 52 5/8 on Thursday.