Five companies are in the running for three third generation (3G) mobile communications licences after bidding closed today, the communications regulator said.

The five are Celcom (Malaysia) Bhd, E-Touch Sdn Bhd, state-owned Telekom Malaysia Bhd, TIMESat Sdn Bhd and UMTS (Malaysia) Sdn Bhd, the Malaysian Communications and Multimedia Commission said in a statement.

The government has said it will award the 3G licenses after a "beauty contest," with each 15-year licence priced at RM50 million. The results are due to be announced by July 30.

The decision would be made on six criteria - ability to ensure service rollout and coverage, capacity for infrastructure sharing, roaming capacity, financial standing, commitment to industry development as well as management and technical expertise, the commission said.

Digi Telecommunications, which was earlier tipped to be one of the three successful companies, surprised investors by announcing that it has decided to drop out of the race.

UMTS is a unit of Malaysia's largest mobile phone operator Maxis Communications, second largest operator Celcom is a unit of Technology Resources Industries (TRI) and TimeSat is owned by the Time dotCom group.

E-Touch is the dark horse in the race, with little known about the company except that it was awarded an application service provider licence by the commission in April.

The 3G networks, which allow speedy access to data and video through the Internet, are expected to be rolled out by the end of next year.

Sure winners

Prime Minister Dr Mahathir Mohamad has said he wanted to see Malaysia's telecoms rivals reduced to three from five at present.

Stephanie Wong, analyst with International Data Corp, said sure winners were Telekom and Maxis, which is heading for a listing in July.

But Wong said Celcom's fate was unclear since Telekom also had a stake in the company and bidding was likely to favour Telekom.

"It is not fair. Definitely Telekom and Maxis will get the licence," Wong told AFP but added it was difficult to predict who the third winner would be.

Telekom recently bought a controlling stake in Celcom's parent TRI and has since moved to consolidate its grip on the company to emerge as the single largest shareholder.

Telekom's chief executive Mohamad Khir Abdul Rahman said his company planned to roll out a 3G network covering most of the Malaysian population by 2010.

Celcom said it was committed to invest RM150 million over the next 15 years to develop a 3G network with technical support from its foreign partner Deutsche Telekom.

It said it planned to enter into infrastructure sharing and roaming agreements to minimise network investments and save up to RM7.5 billion over the 15-year period.

Time dotCom chief executive Robert Fox said his company had a fibre optic trunk and metropolitan area networks which would make it the most cost effective choice in deploying 3G.