SEOUL, Dec 15, 2008 (AFP) - The head of an Egyptian firm which is launching a mobile phone service in North Korea arrived Monday in the capital Pyongyang, official media in the secretive communist state reported.

The Orascom Telecom Holding delegation is headed by its chairman and CEO Naguib Sawiris, the Korean Central News Agency said without giving details of the purpose of the visit.

Orascom Telecom announced in January it had won the right to offer the mobile service and said it would invest 400 million US dollars in the project - 200 million US dollars over the first year, and 100 million in each of the
subsequent two years.

The broadcaster said the service will gradually expand to other parts of the country, with mobile handsets costing 700 dollars. This would make them too expensive for all but a tiny minority.

Radio Free Asia said it was not known whether the new service would be restricted to communist party officials.
North Korea strictly controls information, with the tuning controls of radios and televisions fixed to official stations.

It began a mobile phone service in November 2002. But 18 months later it banned ordinary citizens from using it and began recalling unauthorised handsets.

There is still thought to be a mobile network in Pyongyang which is open for government officials. Most foreigners are not allowed to use mobile phones inside the country.

Authorities have staged periodic crackdowns on residents in northern border areas who illegally use mobile phones through relay stations in China.

Orascom is also reportedly funding construction work on the 105-storey Ryugyong Hotel, a landmark in the capital. Work was suspended for nearly 20 years due to funding problems.

In July 2007 Orascom Construction announced a deal to invest 115 million dollars in a North Korean cement plant.