Kuwait said it would launch a third mobile phone operator in the first quarter of 2008 once it has found a strategic partner, heating up competition in one of the world's most penetrated markets.

Kuwait will sell a 26-per cent stake to a foreign operator or listed local non-telecom firm as strategic partner and another 50 per cent to the public, said Kuwait Investment Authority (KIA).

Kuwait, where there are more cell phones than residents, is currently served by Mobile Telecommunications Co (MTC) and National Telecommunicatins Co (Wataniya), which are both rapidly expanding to tap new markets.

'We will stop receiving offers in September and hope to choose a strategic investor in October,' Adel Al Roumi, chairman of the new company's founding committee, said.

The tender, which is expected in mid-July, would require a minimum bidding price for the strategic stake, said Roumi, without specifying the amount.

The committee said the firm's strategy was still under study but it would propose that the government allows the new operator to use parts of rivals' infrastructure at the start.

'Based on previous experience, our companies cooperate ... There has to be cooperation,' said Abdul-Karim Salim, a technical expert on the committee.

Roumi said the firm, in which the government will keep a 24 per cent stake, had a capital of 50 million dinars ($174 million) but this might change as the strategy was being worked out.

He said the firm would offer a 50-per cent stake to the public after having found a strategic partner, with subscription expected to be in January.

Roumi said shares would be offered at 100 fils plus a premium of around 3-5 fils. There are 1,000 fils per dinar.

The government has said shares will be offered to citizens only, a key way in the Gulf state to share massive oil revenues.

 The government agreed in December to set up the third mobile firm with a capital of 50 million dinars after parliament approved the plans to help provide cheaper and better telecom services in the country of 3 million people.

 The committee also said Kuwait was preparing to set up a telecoms regulator.

MTC, the country's biggest mobile operator, earlier this year won the third Saudi mobile licence and bought Netherlands-based Celtel for $3.4 billion in 2005 to expand in sub-Saharan Africa. Wataniya is expanding in North Africa and the Middle East. Reuters