Telekom Malaysia, owner of a majority stake in Guinea's state-run telecommunications company, has suspended its contract citing difficulties on the ground in the west African state, officials said yesterday.

The group bought a 60-percent stake in the telecom company in December 1995 for close to one billion dollars, leaving the other 40 percent in the hands of the Conakry government.

In a letter dated Jan 14, the company announced it would discontinue its investment effective Monday, citing difficulties in getting the network operational from the get-go, a source within the Guinean mail and telecom ministry told AFP on condition of anonymity.

Contract cancelled?

Senior officials from both sides met privately Monday and were to continue meeting Tuesday to hammer out an agreement allowing Telekom Malaysia to withdraw from what had been devised as a 10-year contract, he added.

Guinea, during the meetings, has complained that Telekom Malaysia had not fulfilled its end of the deal, failing to sign up the promised 500,000 new customers and to turn the company into a "modern and high-tech telecommunications company," the source said.

The government also rejected a proposal from the Malaysian group to remain involved with the running of the telecom company, known as Sotelgui, opting instead to manage the network itself until a new investing partner can be found.