(AFP) Malaysia is unlikely to auction third eneration (3G) mobile telecommunications licences because it wants to keep costs low, Prime Minister Mahathir Mohamad said today.

Mahathir said high bids at the auctions of 3G licences in other countries have been too costly for the companies that secured the licences.

"The government believes that getting money upfront is not all that important. It is what we get all the way through in the future that is important to us, so we are not likely to auction the licence," he said during talks with corporate chiefs at a business conference.

"We are still studying all the methods. Perhaps we will choose a company that has the best capability and give it to that company at a cost that will make it profitable for them," he said.

Speedy access

"We want to make sure that once the telco gets this licence to operate then they can make money and if they make money, then as you know government makes money."

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

The government has said guidelines for awarding 3G licences should be completed by the year-end or early 2002, and that commercialisation of 3G services may only start in 2003 or 2004. There are some five million mobile phone users among Malaysia's 23 million population.

Mahathir said the government was also considering the implementation of more broadband facilities and wireless technology.

"We may have to let some telcos who have invested in landlines to lose quite a lot of money in order to move ahead," he said.

He added telecom companies must not be held back by outdated infrastructure but should switch to wireless technology for faster speed and higher capacity.

The premier called for more computer and Internet courses for the elderly, saying the fear of change and the need to invest were deterring them.

Low usage of IT

"We need to be a little patient with older people... If they cannot (learn about new technology), then we hope they will retire soon," he added in jest.

In his keynote address earlier, Mahathir voiced concerns over the low usage of information technology by small and medium enterprises, which make-up about 90 percent of Malaysia's manufacturing firms.

The premier warned they risked being sidelined because they were unable to connect electronically to the global supply chain network.

"Remember that government protection cannot be relied upon any more once markets are opened by Afta (Asean Free Trade Area) and the WTO (World Trade Organisation)," he added.

Under Afta, tariffs on imports among the most developed Asean members are due to fall to below five percent at the start of 2003.

Mahathir said later that the government would consider proposals by various business groups to lower taxes and provide incentives in the 2002 budget to be unveiled Oct 19.

The premier, who is also finance minister, said he would present the budget in parliament this year. He declined to comment about possible income tax cuts, saying: "I like to surprise people."