SAN DIEGO (AP) _ Qualcomm Inc. has outbid AT&T Corp. and MCI Communications Corp. in the contest for wireless phone licenses in Mexico, emerging as an unlikely front-runner.

The San Diego-based company and its Mexican partner, Pegaso, have bid more than $285 million so far in the government-run auction, The San Diego Union-Tribune reported Thursday.

Both AT&T's Mexican phone affiliate, which pulled out this week, and MCI's Mexican partner, which backed out in December, said prices had gone too high. The companies were competing for frequencies that cover Mexico's most densely populated regions.

If Qualcomm's bid is not topped, it will win licenses in nine regions, including Mexico's ``crystal triangle'' _ Mexico City, Monterrey and Guadalajara _ as well as Tijuana. Service could be available in some areas by the end of the year.

The auction won't officially end until companies stop bidding for licenses, but industry watchers expect that to happen within the next few weeks.

Wireless is expected to explode in Mexico, where fewer than 10 percent of the country's 94 million people own a telephone. In Mexico, it can take a year to get phones installed and it's expensive _ about 11 times higher than in the United States. Like other developing countries, Mexico sees wireless as a way to bring the country into the modern telecommunications age quickly and cheaply.

``Strategically, this is very important to us,'' said Thom Degnan, Qualcomm's vice president for Latin America sales and marketing. ``We see Mexico as a high-growth market.''