The second GSM licence will provide for an additional 5 million lines within three years. It is understood that the government has guaranteed that for the first two years of the new licence, the incumbent operator Telecommunications Company of Iran (TCI) and the second licence holder will have exclusivity rights, after which there is the possibility of a third licence being issued.

Another 6 million lines are set to be added over three years with the implementation of the 20-year BOT contract, awarded to the consortium comprising RIC, Tele2 and an unnamed foreign investor in May. Four European companies have bid for the first main supply package on the project - comprising the installation of 2 million GSM lines in two phases over the next two years. They are: France's Alcatel, Sweden's Ericsson, Finland's Nokia and Germany's Siemens.

However, industry sources say the project is likely to face delays over RIC's alleged plans to release Tele2 from the consortium and bring on board another foreign partner. The move could potentially lead to the need to renegotiate existing terms, or to a retendering of the contract.