The BOT contract will involve provision for 2 million pre-paid subscriptions in the first two years of operation, expandable to 6 million lines thereafter. The contract will run for 10 years from the start of operations. RCI and Tele2 have already begun the process of selecting suppliers for the new network. As well as Sweden's Ericsson, Finland's Nokiaand Germany's Siemens, the three companies already present in the market, France's Alcatelhas been issued with a request for quotations. It is not yet clear whether the client will award the contract to one company or split it into several packages. In total, the work is expected will be worth around $200 million and will be awarded by the end of June.

The 2.2 million-line expansion awarded in mid-April is to be split almost equally between Ericsson, Nokia and Siemens, which built all of the existing GSM infrastructure for Telecommunications Company of Iran (TCI). The total value of the programme is about $140 million, which will also be split equally between the three. TCI is now apportioning the work according to existing infrastructure requirements: each of the companies will expand the networks they originally built.

The second GSM licence will be signed in mid-May between the Information & Communication Technologies (ICT) Ministry and the successful consortium Irancell, once company registration is completed. Because the consortium has foreign ownership of about 70 per cent it must register through the Foreign Investment Promotion & Protection Act with the foreign investment organisation at the Finance Ministry. The draft licence has already been signed.

The consortium is led by Turkcelland also includes Ericsson and Finland's Sunaray. The local partners are Parman Ertebadand Iran Electronic Development Company, a joint venture between Industrial Development & Renovation Organisation, the Defence Ministry subsidiary Sa Iranand Bonyad Shahid. The consortium will be allowed to roll out an unlimited number of lines, but has committed to fulfilling population coverage of 49.9 per cent within the first year of operation - a considerably more aggressive programme than the three years stipulated in the tender.

According to the ICT, Iran now has 3.4 million GSM subscribers. TCI has sold a further 5.6 million subscriptions at $525 each, which are to become operational within a year. The black market price is closer to $1,000. However, TCI's own expansion plans are unlikely to provide more than 2 million lines, necessitating the refunding of payment for several million SIM cards. Some 1.5 million-2 million lines will be added over this period by Irancell and 500,000-700,000 lines through the prepaid BOT project. In total, the network is likely to more than double to about 7.5 million by April 2005.

ICT is already planning to introduce a third licence, which under the terms of the contract with Irancell, can come into operation two years after the second licence is signed. 'This means real competition between private companies rather than the false competition between a private company and a government incumbent,' says a local official. 'Prices and services should automatically improve and TCI will be put in a very difficult position because it now takes a year to give a SIM card after taking the customer's money. The second licence-holder must give it within five days.'

TCI itself is preparing to privatise. The fourth five-year development plan says its data and cellular subsidiaries should be listed on the Tehran Stock Exchange by 2010, but TCI has committed to offer 51 per cent of its stock in each subsidiary within the next four years. The company will also list its 28 provincial fixed-line subsidiaries.