HK: Idea Cellular draws strong demand for IPO

Hong Kong, Feb 16: Idea Cellular, India's fifth-largest mobile phone operator, has drawn strong demand for its roughly 0 million initial public offering, a person familiar with the deal said on Friday.

Mobile carriers in India, the fastest-growing major cellular market in the world, are drawing extremely high valuations.

Foreign interest in the industry was highlighted when Vodafone on Sunday agreed to pay .1 billion for a controlling stake in Hutchison Essar, the No. 4 operator.

The Qualified Institutional Buyer (QIB) portion of Idea Cellular's IPO, which will make up 0 million of the deal, is more than 90 times oversubscribed, the source said, as the Indian cellphone market draws global attention and high valuations The total issue, which has a price range of 65 to 75 rupees per share, is 57 times oversubscribed, the source said.

Idea Cellular, which is controlled by the diversified Aditya Birla group, marketed the deal from Monday through Thursday afternoon, and it will price on Monday.

JM Morgan Stanley and DSP Merrill Lynch are managing the IPO, while Citigroup and UBS are co-managers. The deal has an over-allotment option of up to 3.19 billion rupees (US million).

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.

(US$=43.87 rupees)

Reuters