"The process of privatisation should be finished before the end of the second quarter of 2006," Algerie Telecom Chief Executive Brahim Ouarets said.

France Telecom, Telefonica, Etisalat, Portugal Telecom and Deutsch Telekom have already showed interest in a tender, a source close to Algerie Telecom said. The partial sale of the operator is part of the government's plan to attract foreign firms. Algeria has a population of 32 million people and foreign investment is beginning to return after a decade of civil war. Neighbouring countries Morocco and Tunisia have successfully opened their state-owned operators to foreign companies.

"We don't know yet how big a stake we will be selling, but it seems that the Moroccan model should be fine," a senior Algerie Telecom source said.

"Maroc Telecom started with selling off 35%. It reached 51% a few years later," he said, adding the firm expected to raise up to US$ 3 billion for a 35% stake.

Spanish bank Santander Central Hispano is preparing Algerie Telecom for the privatisation process. Algerie Telecom has struggled to compete with rivals Orascom Telecom and Kuwait’s National Mobile Telecom in the country's growing mobile sector.

Algeria recently sold a fixed-line license to a consortium of Egyptian carriers to compete with Algerie Telecom, which cannot keep up with demand in the fixed-line sector and is struggling to offer the latest technologies to customers. The government wants a strategic investor for Algerie Telecom that would be able to invest money, provide technical expertise and help the firm possibly expand internationally.

Algerie Telecom has 4 million mobile and 3.5 million fixed-line clients. Ouarets said the operator made a net profit of US$ 68.7 million in 2004. Algeria's mobile market is expected to double to 20 million subscribers in the next two years.

Source: Reuters - WDR/Intelecon Regulatory News