The pre-qualified firms are France Telecom, Telkom South Africa, Etisalat, a consortium led by Swedtel, VTEL (a consortium from Palestine), Mahanagar Telephone Nigam Ltd. and Bharti Venturetech of Mauritius, officials said.

Kenya is offering one license for an array of services including mobile, Internet backbone, international voice gateway, commercial VSAT and provision of long-distance voice and data. Thirteen companies had expressed interest, including Portugal Telecom, Saskatel of Canada and Detecon of Germany. Industry officials said the response by international firms was good, in part because Kenya is offering a unified license.

This is the second time Kenya has invited international companies to compete with state-run Telkom Kenya. The previous bidding process in 2003 was cancelled after only one bidder remained in the race.

Kenyan businesses have complained that poor and unreliable telephone services by Telkom Kenya add a tremendous cost to doing business.

"The prices for mobile telephone services are still high for the majority of users…We expect that the second national operator shall inject the necessary competition...to bring prices downwards," said Bitange Ndemo, Kenya's permanent secretary for the ministry of communication.

Kenya's two mobile providers, Celtel and Safaricom, had combined subscribers of 6.5 million by June. Fixed-line subscribers number only 300,000. CCK says the Kenyan market has a potential of 12 million mobile subscribers and 2 million fixed-line subscribers.

Johannesburg-based Econet won Kenya's third mobile license in 2003 but has yet to start operations after it became involved in a protracted dispute with its partners, prompting the government to cancel the license. Econet is challenging the cancellation in court.

"The value of the second national operator is the mobile license, so we need a clarification on the future of Econet," Rodica Danciu, France Telecom's vice-president for business development said.

Source: Reuters - WDR/Intelecon Regulatory News