Companies that have expressed interest in the project are understood to include France's Alcatel, Sweden's Ericsson, China's Huawei Technologies, Mitsubishi Corporation of Japan, Motorolaof the US, Nortelof Canada, and Siemensof Germany. Much of the design work has been carried out by German consultant Detecon.

TE has been in discussions with a number of international operators with a view to taking on a strategic partner for the GSM project. The government is also pursuing the option of selling a strategic stake in the entire company, including the GSM arm.

TE will be required to pay a £E 1,975 million ($428 million) licence fee to the Telecommunications Regulatory Authority before the new system starts up. There are now 3.6 million mobile phone subscribers in Egypt, served by two private operators, UK-controlled Vodafone Egyptand the French/local Egyptian Company for Mobile Services. The four-year period of exclusivity enjoyed by the two operators expires in December 2002.

Analysts say the rate of growth of GSM subscribers has slowed markedly in recent months, raising questions about the commercial prospects of a new operator.