ISLAMABAD, May 26: Norwegian cellular company, Telenor Mobile Communications, promised on Wednesday to invest $1 billion in Pakistan in the next five to seven years as it and the UAE's Warid Telecommunications signed formal agreements to provide mobile phone services in the country.

Both the companies signed the agreements with the Pakistan Telecommunication Authority (PTA) after paying 50 per cent, or $145 million each, of fees for licences issued to them last month, at a ceremony attended by President Pervez Musharraf at his Rawalpindi camp office, PTA chairman Shahzada Alam Malik told reporters later in Islamabad.

Telenor president and chief executive officer Jon Fredrik Baksaas and Warid chairman Sheikh Nahiyan Mobarik Al Nahiyan signed the agreements for their companies.

President Musharraf, according to an official statement, assured the two companies of a continuity in the government's economic policies and said he was looking forward to a greater investment by them in Pakistan.

He expressed the hope that the two companies would have a good working relationship with the PTA. The PTA chairman described Wednesday as a good day for Pakistan's telecom sector with the completion of a licensing process started six months ago.

The new players will bring healthy competition that will help improve service quality, reduce tariffs and create employment opportunities, Mr Malik said. "On the whole Pakistan's telecom sector is likely to grow and improve tremendously."

Mr Baksaas told reporters that after paying half of the licence money, his company would pay the rest of the amount in 10 years, while the mobile phone service would be available sometimes in April next year.

"Telenor is ready to launch network roll-out in the Pakistani environment initially in the cities," he said, adding that the company would bring $1 billion to Pakistan in the next 5-7 years.

Explaining reason to focus on the Pakistani market, he said his company had good experience of offering affordable services to attract new customers in countries with fairly low mobile penetration. "We hope to use this confidence with good features in this country."

The PTA had granted the two mobile cellular phone licences for a total $582 million ($291 million each) in an open bidding on April 14. The two new entrants in Pakistan's expanding mobile telephone sector will compete with four existing companies - Mobilink, Ufone, Paktel and Instaphone.

Mr Baksaas said Telenor had mobile phone operations in more than 11 countries, including Thailand, Malaysia, Bangladesh, Hungary, Ukraine, Russia, and now in Pakistan.

Answering a question, he said his company had not yet finalized a pricing plan because Telenor was more involved these days with fulfilling licence terms, selecting network suppliers and building the profile of the service it would offer. Mr Baksaas said his company would also participate in future licence offers if it were beneficial for the mobile service offered by it.