Jill Jolliffe, Dili – A Portuguese company is poised to win a $US16 million contract to set up East Timor's new telecommunications network, further consolidating Portugal's commercial influence in the new nation.

Australia's Telstra had declined to bid for the contract, even though it has been running East Timor's phone and Internet network since 1999. Another Australian-led consortium failed to submit its tender documents on time.

This left Portugal Telecom International as the only bidder. Portugal already has considerable commercial and cultural influence in its former colony, which has chosen Portuguese as its official language, along with the Timorese language Tetum.

East Timor's Minister for Transport, Communication and Public Works, Ovidio Amaral, told The Age there was no competition from Australian companies.

He said the Australian-led consortium Telekomunikasaun Timor Lorosae (TTL) had prequalified but failed to submit its tender by the May 14 deadline. TTL partners included British Telecom and Germany's Siemens company.

TTL executive chairman Robert Cooksey had requested an extension of the deadline after being unable to secure an airline seat as flights to Dili were booked out by visitors to the independence celebrations on May 20. He was permitted to file documents by e-mail, but the minister said they had not been submitted on time either.

Mr Cooksey disputed this and said he had told the East Timor Government last week that TTL would dispute the exclusion in court.

Nor had Telstra entered a bid. "Telstra knew it wouldn't earn profits after independence," Mr Amaral said. "There will only be a profit margin of around 10 per cent involved."

He said Telstra's relationship with East Timor had been established with the UN administration on its entry into the territory in 1999, and had been renewed regularly on a 90-day contract basis.

The Portuguese tender will be assessed for two months and, if it meets required standards, negotiations will begin in July for the Lisbon-based company to establish the new system.

Most Dili homes have not had fixed telephones since Indonesia's 1999 scorched-earth withdrawal, and there are only six landlines in each of the country's 12 other districts.

Mobile telephones paid for by the outgoing UNTAET administration were cut off in government offices throughout the country last Friday, with the incoming East Timorese administration having no alternative contracts in place.

Mr Amaral said the fact that Portugal Telecom International would be working in Portuguese had not influenced the company's chances. "It's not a criterion for the tendering, but it is an advantage," he said.

Last year Telstra officials here were criticised by the UN, which alleged the company had taken substantial revenue out of East Timor and put very little back.

Telstra entered the territory at the UN's request, principally to provide mobile phone services to peacekeepers in a territory entirely bereft of telecommunications.

Telstra spokeswoman Karen Gomez said from Sydney that it had not tendered for the telecommunications contract because "it was not part of our international business strategy in the short term".