BEIJING, May 8 (Xinhuanet) -- Telkom Kenya has signed a deal with Ericsson Kenya Ltd. to set up a new mobile phone network in East Africa's largest economy, the companies said.

    Telkom Kenya expects the GSM network to be running by year's end, and has hired Ericsson to build and operate it initially as Telkom Kenya retrains and recruits technical staff.

    Ericsson will help in training engineers, and will transfer management to Telkom in 18 months, the companies said at a news conference.

    The deal, signed late Wednesday, anticipates project costs of 9 billion shillings (145.6 million U.S. dollars; 94.4 million euros).

    Over the next three years, Telkom Kenya plans to invest 19 billion shillings (307.4 million dollars; euro199.3 million), CEO Dominique Saint Jean said.

    Kenya - East Africa's largest mobile phone market - already has two established network providers, and apart from Telkom Kenya's project, another is being set up.

    Mobile phone use has expanded beyond expectations in the country, with 6.48 million subscribers as of June 2006, compared with 180,000 in June 2000, according to the Communications Commission of Kenya.

    Telkom Kenya was privatized in December 2007, with a France Telecom-led consortium.

    (Agencies)