pHong Kong, Feb 13:  India's Idea Cellular Ltd. has started marketing an initial p

Hong Kong, Feb 13: India's Idea Cellular Ltd. has started marketing an initial public offering worth up to $550 million on the heels of Vodafone's $11.1 billion investment in India's booming mobile phone market.

Idea Cellular, which began marketing to investors on Monday, is selling shares in India in a price range of 65 to 75 rupees in a deal that could fetch up to 24.44 billion rupees ($553 million), market sources said. The books for the deal will close on Thursday afternoon in Mumbai.

Vodafone looks set to transform India's mobile phone market with its $11.1 billion bid for a controlling stake in Hutchison Essar, the country's fourth-largest mobile company, in a deal announced late on Sunday.

The all-cash acquisition values the whole of Hutchison Essar at $18.8 billion. Hong Kong tycoon Li Ka-shing's Hutchison Telecommunications is selling the 67 percent stake.

Idea Cellular is a smaller player in the Indian market, which is led by Bharti Airtel Ltd. , Reliance Communications , Bharat Sanchar Nigam Ltm. and Hutchison Essar. It plans to use the IPO proceeds to set up services in Mumbai and move into other regions.

The company has roughly 12 million subscribers, and the high end of its price range values it at 109 times fiscal 2006 earnings per share of 0.69 rupees. Bharti Airtel trades at about 43 times trailing earnings.

Indian mobile carriers are drawing extremely high valuations as it is the fastest-growing major cellular market in the world.

Vodafone Chief Executive Arun Sarin said only 13 percent of India's 1.1 billion people had mobile phones, compared with 40 percent in China and 100 percent in parts of Europe.

JM Morgan Stanley and DSP Merrill Lynch are manging the IPO, while Citigroup and UBS are co-managers.

The IPO has an over-allotment option of up to 3.19 billion rupees.

Idea Cellular, which is controlled by the diversified Aditya Birla group, had earlier raised 3.75 billion rupees in a pre-IPO share placement.

(US$1=44.2 rupees)

Reuters