TCI is evaluating bids from Finland's Nokia, Germany's Siemensand Sweden's Ericsson, the only companies authorised to bid for projects in the mobile phone sector. It is understood that TCI plans to incorporate all three companies into the project.

The estimated Eur 40 million ($39 million) package to provide switches is expected to be awarded to Ericsson. The second package, calling for the supply of radio equipment, will be split between the three competitors, with Siemens' share of the contract expected to account for 55 per cent, Nokia's for 30 per cent and Ericsson's 15 per cent. The package is estimated to be worth about Eur 80 million ($78 million).

The project was initially aimed at increasing mobile network capacity outside Tehran, but will now provide cellular phone lines both in and outside the capital, where the majority of Iran's 1.2 million mobile phone users are located.

The project is part of a larger programme launched by the Posts, Telephones & Telegraphs (PTT) Ministry to upgrade Iran's mobile network to 10 million lines by the end of the third-year development plan, in 2004.

Under the programme, TCI plans to install another 2 million mobile phone lines for the company's first pre-paid services. The project will be carried out on a build-operate-transfer (BOT) basis for a period of 10-15 years. Local companies submitted prequalification documents for the scheme by 17 June.

Industry sources say TCI is expected to shortlist companies in July to bid for the project. Local firms will then team up with international telecommunications equipment suppliers and potential investors.

'We are in contact with several local firms and plan to go into the BOT scheme as a supplier,' says one Tehran-based representative of an international telecoms firm. 'However, we will not provide any investment. A lot of money will be required to carry out the project and 10-15 years is not a long period. In addition, tariffs are low in Iran.'

TCI is also pressing ahead with the evaluation of company proposals for the mandate to act as adviser on the sale of a second GSM licence. A PTT source said on 25 June that administrative problems have slightly delayed the evaluation process, but a contract award is expected by the end of July.

Bidders for the advisory mandate are BNP Paribas, HSBC Investment Bank, PricewaterhouseCoopers, European Projects Development- a consortium including Rothschild Conseil International- and Mason, a consortium supported by at least one international bank.