TCI is planning to set a late-February bid deadline for offers, although industry sources say it is likely to be extended. The consortia range in size from one-three international operators in partnership with regional and privately-owned local firms. TCI has strict regulations determining which companies are eligible to apply together in order to maintain the private-sector nature of the tender.

The second licence will create a duopoly in Iran's hitherto closed telecommunications market. It is expected to help boost GSM capacity to around 5 million lines in 2006 from only 2.5 million lines now. It will also help reduce the price of a GSM subscription for consumers, which now costs about $1,000. An award is scheduled for mid-2004.

Industry sources say most of the interest has come from European and African operators, with plenty of financial backing from companies based in the Gulf. But some European operators are reported to be concerned about tendering procedures after the difficulties encountered in signing a GSM prepaid contract early this year.

The pre-paid project is to be carried out on a build-operate-transfer (BOT) basis and will involve the installation of around 2 million lines. In February, the local Rafsanjan Industrial Complex (RCI) was selected as the contract winner in partnership with Europe's Tele2. However, Tele2's agreement with RCI is understood to have been made by its local subsidiary and was not binding on the parent company, which now wants to pull out. Companies owned by RCI participated in several consortia bidding for the BOT project in partnership with other international companies, one of which is a shareholder in Tele2.

The difficulties have led to delays in the project, for which an equipment supplier has yet to be selected. Four companies have bid for the estimated $100 million contract.

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