AdriaCella was the only bidder for the license. It was created by Syrian operator Syriatel Mobile Telecom and a group of investors from Lebanon and the United Arab Emirates.

"Their bid received fewer points than the minimum necessary to obtain the concession. It was therefore unanimously turned down," said Gasper Gacina, head of the telecommunications agency. Gacina said Croatia would likely call for a new international tender later this year.

The price of the 20-year GSM licence has been set at US$ 17.4 million. The bidder, AdriaCella, had planned to invest between US$ 90 and US$ 121 million in the first 18 months, hoping to win between 15-20% market share. The group also hoped to invest in Croatia's tourism industry.

"We are disappointed. For us, the offer was very serious; we are serious investors. I don't really understand what happened, but Croatia also lost from this," said Nader Kalai, a Syriatel official.

Mobile market penetration in Croatia is 65% and some analysts doubt the viability of a fourth mobile operator. Two mobile operators are currently active – T-mobile Hrvatska, which is owned by Deutsche Telekom, and VIPnet, owned by Austria Mobilkom. The third operator, a Swedish-Croatian consortium led by Sweden's Tele2, won a license in December 2004 and is expected to begin operating by the end of the summer. It plans to offer price reductions of 20-50% and hopes to take a third of the market. Croatia has undertaken considerable liberalised of its telecommunications market in the last year and has licensed a dozen fixed-line operators, three of whom are already active.

Source: WDR/Intelecon Regulatory News