Lee Hsien Loong, the Deputy PM said, however, the reduction of the government's 78 percent stake in SingTel will depend on market conditions and will await the right price.

The announcement followed a statement by Australia's Federal communications minister, Senator Richard Alston that the Australian government was prepared to investigate the Singapore government's control of SingTel if it acquired Optus.

SingTel's bid for the Australian telecom company has raised concerns that a foreign company would control Optus and might try to influence regulatory policy in the local telecom industry.

Critics say SingTel's status as a majority state-owned company had previously hurt the company's efforts to expand in Asia, most notably in last year's failed attempts to buy Cable & Wireless HKT and Time Engineering Bhd.

SingTel is also perceived to have close government links. Lee Kuan Yew's son, Lee Hsien Yang, is the company's chief executive, and also the younger brother of the Deputy PM.

The stake-reduction plan reflects the country's strong ambition to become a major player in the telecommunications business in the Asia-Pacific. Singapore realizes that winning the bid for Optus will be more profitable for it in the long run than defending its veto rights in SingTel.

In related news, Lee Hsien Loong also announced a plan to reduce the government's 45.5 percent stake in DBS Bank, Southeast Asia's largest