Will India's $10 billion IPO lure investors to the world's fastest-growing major wireless market?

India plans a $10 billion initial public offering of the nation's former telecommunications monopoly, betting the world's fastest-growing major wireless market will lure investors. As much as 10 percent of Bharat Sanchar Nigam may be sold in India and overseas, Finance Director S.D. Saxena told reporters. Telecommunications Minister Andimuthu Raja said the government may sell part of its stake in an IPO that would quadruple India's current record.

Vodafone Group Plc overtook Bharat Sanchar as India's third-largest mobile phone operator in July as a lack of equipment stalled growth at the state-run carrier. The IPO would make Bharat Sanchar Asia's biggest wireless company by market value after China Mobile. "The growth potential in India is huge," said Sumit Modi, telecom analyst at Emkay Share and Stock Brokers. "The mobile penetration is just less than 20 percent.'' Vodafone took control of Hutchison Essar in May for $10.7 billion to expand in a market where 874 million of the nation's 1.1 billion people don't own a mobile phone.

Prospects for subscriber growth drove a 58 percent gain in Bharti Airtel and Reliance Communications, India's two biggest wireless operators, last year on the Bombay Stock Exchange. Adding Subscribers India added 8.33 million wireless users in November to end the month with 225.5 million subscribers, making it the world's third-largest wireless market after China and the U.S.

On average, the South Asian nation added 7.5 million new wireless connections each month between April and November, compared with 5.5 million in the same period a year earlier. To fund this growth, Bharat Sanchar plans to raise as much as 400 billion rupees ($10.2 billion) selling shares in India and overseas in about a year, Saxena said.

The New Delhi-based operator, India's largest telephone company, added 1 million wireless subscribers in November to end with 35.9 million. Bharat Sanchar also has about 34 million fixed-line users in a market where the numbers of subscribers has been declining in recent years. Record Sale The share sale is the third announced in six weeks by India as the government taps a record stock market rally to raise funds for new planes, railway equipment and telecom gear. Rites, a unit of state-owned Indian Railways, will sell shares for the first time, said Finance Minister Palaniappan Chidambaram. Air India plans to sell a 15 percent stake, Civil Aviation Minister Praful Patel said on Dec. 4. Air India was formed by the merger of Air India and Indian Airlines India's Sensitive Index gained 47 percent in 2007, the biggest rise in four years, spurring companies to raise a record $8.5 billion from initial public offerings, according to data.

Bharat Sanchar may surpass India's IPO record set by real estate company DLF, which raised 91.9 billion rupees last year, and the maximum 117 billion rupees that Reliance Power, a generating unit of the country's second-largest utility by market value, seeks to raise in an IPO starting very soon.

With such rapid growth, who will come out tops in this wireless market race?