SINGAPORE, Feb 5: Pakistan could be the next destination for Singapore Telecommunications Ltd after officials on Thursday named state-owned Pakistan Telecommunications Company Limited (PTCL) as a "possible" investment target.

"PTCL is among those possible," investments for SingTel, Chief Executive Lee Hsien Yang told Dow Jones Newswires on Thursday. While it evaluates whether to buy a stake in PTCL, the Singapore operator has also expressed interest in buying a mobile phone license in Pakistan. Vodafone Group PLC (VOD) and US-based MCI Inc. (MCIAV) are among the other 33 companies that have expressed interest.

Pakistan has been looking to sell a strategic stake - as much as 26 per cent - of PTCL, the country's second-largest listed company that runs a nationwide fixed line and international direct dialling network and a mobile phone service.

The government owns 88 per cent of PTCL while the rest commands a $2.5 billion market capitalization on the Karachi Stock Exchange. SingTel's market capitalization stands at $22 billion.

"Southeast Asia and North Asia have fairly limited potential in terms of buying opportunities for SingTel," said Barclays Capital analyst Lloyd Ong. "Pakistan is an extension of its radar screen but in terms of growth it will be better than what we have seen in the (immediate) region here."

Senior SingTel officials have met Pakistani officials hoping that the country's Privatization Commission would accelerate the sale process which has been in limbo since the sale was first announced in the 1990s. Goldman Sachs and JP Morgan Chase are advising the Pakistani government.

The sale may even be discussed in Singapore when Pakistan's Finance Minister Shaukat Aziz visits the city-state starting on Friday, sources say.

Buying a significant stake in Pakistan Telecom would be consistent with SingTel's overseas expansion strategy where it has typically sought control of companies, particularly in fast-growing emerging markets.

SingTel "would want to have a significant role in the business" if it chooses to invest in Pakistan Telecom, Lee said.

If SingTel does decide to proceed, investing in Pakistan Telecom would add another major Asian investment to its portfolio, which now spans Australia, Thailand, Indonesia, India and the Philippines.

The S$20 billion SingTel has spent acquiring assets has allowed it to become Southeast Asia's largest telecommunications group which earns some 68 per cent of earnings before interest, tax depreciation and amortization, from outside Singapore.

Any significant investment could have implications for SingTel's debt levels, which currently stand at $8.5bn, but SingTel sought to ease concerns about any increase in its debt position.

"We wouldn't want to do anything that damages the investment-grade rating," of SingTel credit, SingTel Chief Financial Officer Chua Sock Koong told Dow Jones Newswires. SingTel is rated A1 by Moody's Investor Services and A-plus by Standard & Poor's for its long-term debt.

Chua said there is "flexibility" for SingTel to raise its debt levels, although having the ability to do so doesn't necessarily mean that it will, she added.

Barclays's Ong says he doesn't"foresee SingTel needing to raise debt for acquisition purposes. It has S$2 billion in cash, plus I expect it will have more than S$1.5 billion coming in from the Belgacom initial public offering." Ong said. SingTel owns 12 per cent of Belgian operator Belgacom SA which plans an IPO this quarter.

As for the mobile phone licence, Pakistani officials will meet interested parties on Feb 18, during which terms of the licences on offer will be unveiled. The licences are expected to be awarded in March.

"We have put in an expression of interest for the two licences on offer (but) it's much too early to say if we would like to participate in that," Lee told reporters earlier on Thursday.

"It costs a relatively small amount to express an interest," he added. - Dow Jones Newswires