Asia's biggest phone companies, faced with increasing competition at home, have been shopping for bargains but have so far returned home empty-handed. Hongkong Telecom and Singapore Telecom (SingTel) find themselves in a strikingly similar position: cash-rich and keen to reduce reliance on their own backyard for growth. In the past, they were buoyed by revenues from lucrative international traffic. Both now face the imminent loss of long-held international monopolies and, as a result, have been handsomely rewarded for giving up their exclusive franchises. SingTel has an estimated S$3.9 billion (about HK$18.85 billion) on its balance sheet. Telecom will have about the same in July. when its gets its second compensation payment from the Government for sacrificing its monopoly. Telecom's cash has been referred to as a 'war chest' for investments on the mainland. In the short term, that aim has been thwarted by the mainland's continuing reluctance to allow foreign telecoms operators. Talk coming from Telecom Tower has switched to searching for opportunities among battered companies in Southeast Asia. The most obvious acquisition targets were in Thailand and Malaysia, according to SBC Warburg Dillon Read analyst Jason Billings. He rated companies in the Philippines and Taiwan as possible second-tier targets. In Thailand, cellular operator TAC has about US$1.2 billion in foreign currency debt and, under pressure from lenders, is looking for new shareholder capital. Of that debt, $200 million is due for repayment at the end of this month. Talks with Motorola over deals to swap equipment debts for equity appear to have fallen through. Another company with cash problems is unlisted Malaysian fixed-line operator Time Telecommunications. A lack of resources is not holding either company back. At one point, when the rupiah fell heavily, Telecom could nearly have bought the whole of Telekom Indonesia with spare cash. This was not an option, as the government in Jakarta still retains a 73 per cent stake in the former national monopoly. Mr Billings said the problem for SingTel and Telecom was a lack of experience in foreign investment. Telecom's only big investment abroad is its 16 per cent holding in Singapore cellular operator MobileOne. The company's lack of activity outside Hong Kong remains a colonial legacy. British parent Cable & Wireless (C&W) has preferred to explore opportunities under its own banner, leaving Telecom focused on Hong Kong. Morgan Stanley Dean Witter analyst Jeff Camp doubted Telecom was seriously in the market, with C&W still preferring to do the job itself. He said: 'Why dilute investments through a 55 per cent owned subsidiary when you can go through the parent?' It may be that, as Telecom becomes more independent through shareholder restructuring, this delineation of roles will become increasingly blurred. SingTel, with the Singapore Government as its parent, is in no such dilemma. It has made a raft of foreign investments, most of which have not performed. A few months back, it was telling people it was only keen on purchases that added to earnings quickly. According to Mr Camp, there are not many possible investments in that category. Telecom does have one possible investment in the pipeline. Along with C&W and the MobileOne consortium, it is bidding for a fixed-line licence in Singapore. If the pair have no immediate plans to spend their surplus cash, why do they keep it on their balance sheets? The time for action may be close.