According to a Reuters report, the Algerian government did not receive any bids for the two fixed-line licenses it was attempting to auction, the state regulator ARPT said. Algeria’s market is seen as being uncompetitive and congested and therefore not highly desirable to investors.

The failure to sell the licenses, one for domestic service and one for international calling, was a setback to the country’s efforts to privatise the economy. The ARPT had required USD1.0 billion from bidders to pay for equipment and installations. ARPT said there were over five potential bidders. The official reason given for the failure was a lack of offers, but the uncompetitive local market controlled by state-owned Algerie Telecom was also a major factor. The sale has now been postponed indefinitely.

"I think foreign investors were not ready to put over USD1 billion in this. Weneed to find a better way to attract them here," ARPT general manager Ahmed Gaceb said.

"We are not ready yet. We should review our prices before going forward in calling foreigners to come hereŠOne minute of a local phone call in Morocco costs the equivalent of eight Algerian dinars (USD 0.10), in Tunisia it costs the equivalent of 11 dinars and here in Algeria it costs one dinar," said Algerie Telecom General Manager Messaoud Chetih.

Algeria’s fixed-line telecommunications market is congested and unreliable. The monopoly operator, Algerie Telecom, has 2.2 million subscribers and is unable to cope with growing demand in the country of 32 million inhabitants. Oil and gas-rich Algeria has forecast mobile and fixed-line subscribers will reach 5.6 million by the end of the year and eight million by the end of 2005 but it is not known whether these targets are realistic. The country is also in the process of liberalising the mobile phone market, which is also under-served and is experiencing interconnection problems.