Malaysia's biggest telecommunication operator, Telekom Malaysia, said its wholly-owned unit TM International is in preliminary discussions to buy a stake in India's Spice Telecom Ltd.

Telekom Malaysia said in a statement yesterday that the proposed deal was consistent with TM's continued interest in India, which "we see as complementing our other South Asian investments in Sri Lanka, Bangladesh and Pakistan."

Spice operates in the northern Indian state of Punjab and the southern state of Karanataka with over 1.5 million subcribers.

Telekom Malaysia and rival Maxis Communications, Malaysias biggest mobile phone company, are offering more services and expanding to lucrative markets overseas to beat rising competition in the domestic market.

Sixty-three percent of Malaysia's 26 million people own a mobile phone.

Maxis, in a reply to a query by the stock exchange if it was competing for a stake in Spice, said an appropriate announcement would be made in due course.

"Maxis' strategy for overseas expansion has been to explore opportunities in emerging markets with good potential for growth and Maxis continues to have discussions with various parties," it said in a statement.

It did not elaborate.

Competing companies

The Edge newspaper last month said that both Telekom Malaysia and Maxis were among those competing for a stake in Spice.

Last December Maxis said it would buy Indian mobile company Aircel Ltd for 1.08 billion dollars in a joint venture with an Indian partner.

Aircel is a leading mobile operator in the southern Indian state of Tamil Nadu and posted a profit of 25 million dollars for its year to March 2005.

Maxis, controlled by tycoon Ananda Krishnan, is Malaysia's premier telecommunications company providing voice and data services.