The Australian mobile phone firm, Optus, has been sold to Singapore Telecommunications for $17.2bn Australian dollars (�6.01bn, $8.6bn), the biggest acquisition ever made by a Singapore company.

A rival bid for Optus from Vodafone Pacific, the Australian arm of the world's biggest mobile phone firm, failed because of regulatory concerns.

The newly formed company will now create an Asian telecoms heavyweight, with a market capitalisation of about $24bn.

The news that UK telecoms firm Cable & Wireless has managed to ditch its 52% share in Optus for �2.7bn ($3.86), pushed its share price 6.5% higher to 475p in the first hour of trading in London.

But shares in SingTel plunged 9% to a twelve-month low of $2.19 with investors feeling that the acquisition was overpriced.

In the clear

The Australian government has already confirmed that the SingTel-Optus deal would not create any regulatory problems.

Australia's competition watchdog studied the implications of Vodafone taking over Optus, fearing that a takeover could boost Vodafone's share of the Australian market to more than 50%.

Vodafone withdrew from the bidding, but was rumoured to be mulling a revised bid later this week.

Telecom Corp. of New Zealand was also vying to buy the Australian firm.

Optus has been up for grabs since November 2000.

Negotiations with SingTel only started recently, with a deal quickly concluded.

Cable & Wireless owned 52% of the company, with the rest held publicly.