By Yantoultra Ngui

SINGAPORE (Reuters) -A consortium of U.S. investment firm KKR and Singapore Telecommunications (SingTel) has emerged as the frontrunner to buy a minority stake worth $1 billion in one of Asia's biggest data centre providers, two sources said.

The potential investment in STT Telemedia Global Data Centres (STT GDC) reflects growing interest and demand for data centres across Asia Pacific as nations and companies respond to the boom in artificial intelligence.

The KKR-SingTel consortium is competing with New York-headquartered alternative investment firm Stonepeak for the stake of up to 20%, one of the sources said.

A deal could be sealed or announced in early June, the first source added.

The sources declined to be identified as the information is not yet public.

KKR declined to comment.

SingTel, in a local stock exchange filing on Wednesday, said it regularly explores and reviews business opportunities, projects and proposals relating to its business and enters into discussions with various parties from time to time.

"When such discussions occur, there is no certainty that any transaction will arise from these discussions or that any definitive or binding agreement will be entered into pursuant to these discussions, and SingTel confirms that there is no definitive or binding agreement at this time," it added.

STT and Stonepeak did not respond to requests for comment.

New York-based KKR bought a 20% stake in SingTel's regional data centre business last year for S$1.1 billion ($816 million).

In February KKR announced it had raised $6.4 billion for a fund focused on Asia-Pacific infrastructure and energy-related assets.

Founded in 2014, STT GDC is one of the fastest growing data centre providers with operations in Singapore, the UK, Germany, India, Thailand, South Korea, Indonesia, Japan, the Philippines, Malaysia and Vietnam, according to its website.

ST Telemedia, parent of STT GDC, is a Singapore-headquartered strategic investor specialising in assets including communications and data centres, according to its website.

ST Telemedia is wholly owned by Singapore state investment firm Temasek Holdings.

(Reporting by Yantoultra Ngui; Additional reporting by Kane Wu in Hong Kong; Editing by Sumeet Chatterjee, Andrew Heavens, Jason Neely and Muralikumar Anantharaman)