CASABLANCA, July 2 (Reuters) - Moroccan telecommunications service provider Meditel plans to invest 4.2 billion dirhams ($577.1 million) over the next two years to keep pace with market growth and develop new services, the company said on Wednesday.

The money will allow Meditel -- controlled by Spain's Telefonica SA (TEF.MC: Quote, Profile, Research) and Portugal Telecom SGPS SA (PTC.LS: Quote, Profile, Research) -- to reinforce its GSM and 3G networks as traffic grows and compete with rival Maroc Telecom SA (IAM.CS: Quote, Profile, Research) in mobile network coverage.

"This investment is a central element in ensuring profitable and durable growth in an increasingly competitive sector," Managing Director Mohamed Elmandjra said at a presentation in Casablanca late on Friday.

The company said it would cover 3.28 billion dirhams of the investment from its own funds, a sign of growing financial strength after years paying heavy start-up costs.

Net profit leaped 132 percent last year to 541 million dirhams and expanded its subscriber base by 29 percent to 6.7 million.

The rest of the funds will come from a syndicated loan provided by a group of Moroccan banks, including BMCE (BMCE.CS: Quote, Profile, Research), Atijariwafabank (ATW.CS: Quote, Profile, Research), Banque Central Populaire, Credit Agricole du Maroc and BMCI.

Meditel said it would invest part of the money in developing data services and grabbing more of Morocco's promising Internet market, which has a relatively low national penetration rate of 1.7 percent.

"We would end up obsolete if we stuck with exactly what we've done to now, which is mostly voice and mostly individual clients," said Elmandjra.

Meditel competes with dominant player Maroc Telecom -- controlled by France's Vivendi Universal SA (VIV.PA: Quote, Profile, Research) -- and Wana, a telecoms venture launched by Moroccan national conglomerate ONA (ONA.CS: Quote, Profile, Research). (Reporting by Tom Pfeiffer; Editing by Andre Grenon)