(AFP) The government plans to use third generation (3G) mobile telecommunications licences to speed up a consolidation in the telecoms industry, a senior official said today.

A senior policymaker at the Energy, Communication and Multimedia ministry said there were too many players in the industry and most were reluctant to merge, despite government advice.

"All this while, we have been very liberal towards the industry, allowing them to make their decisions but they have been too slow," the official told AFX-ASIA , an AFP -owned financial news wire.

"We are planning to use the 3G strategy to force them to merge. We have to limit the number of 3G licences to be given out. In the process, we may see some mergers and consolidation of the industry."

There are five telecom companies in the country -- state-owned Telekom Malaysia, Celcom Malaysia, Digi Telecommunications, Maxis Communications, and TimedotCom -- providing services to some five million mobile phone users.

No more licences

The official, who asked not to be named, said the ministry's policy was not to issue any more new licences in the telecoms industry.

He said guidelines for awarding 3G licences, which may include auctioning or tendering, should be completed by the end of the year or early 2002.

"We are not in a hurry to develop the 3G environment and launch the service as no country has fully implemented it yet," he said.

He said his ministry has recommended that import duties on all kinds of telecommunications equipment and components be reduced or removed in the 2002 budget to be unveiled in October.

The government has to bring down its costs in order to compete with China for foreign direct investments, he said.

"We are not talking about bringing down the cost of mobile phones only. We are talking about everything... bringing down telecommunications costs will help boost investments in the country," he added.

The government in June scrapped import duty and sales tax on mobile phones, lowering prices by 30 percent.

The government has said that commercialisation of 3G services may only start in 2003 or 2004.

Third-generation mobile phone services allow speedy access to data and video through the Internet.