Indian mobile operator Spice Telecom is set to begin trading on the Bombay Stock Exchange on either July 19 or 20, after raising INR5.23 billion ($129 million) during its subscription period last week.

Spice priced its IPO of 1.13 million shares at the upper end of its target range at INR46 ($1.13) per share. (See Spice Prices IPO.)

The offering accounts for 16.39 percent of its share capital. The carrier also sold 24 million shares in a pre-IPO placement that raised an additional INR1.12 billion ($27.63 million) from investors including Lehman Brothers and Spinnaker Capital Group .

Spice shareholders MCorpGlobal and Telekom Malaysia Bhd. have each diluted their stakes by 10 percent for the listing, now controlling 40.8 percent and 39.2 percent respectively. (See Spice Telecom Seeks Savory IPO.)

Spice operates in the Punjab and Karnataka regions of India, and intends to use the proceeds of the IPO for network expansion and debt repayment. The carrier has received licenses to offer long distance services and has applied for permission to take its network nationwide.

The offering has met with a mixed response from investment brokers. An Edelweiss Securities Pvt. Ltd. report recommending the stock points to Spice's aggressive expansion plans, improving operating efficiencies, and debt reduction as having a positive impact on the company's financials over coming quarters, and notes that the pricing puts its shares at a discount to rival telcos on a per-subscriber basis.

The report adds: "We believe there is scope for price appreciation given the substantial discount on an EV/subscriber basis, besides further scope for valuation upsides from two potential triggers in the near to medium term — Spice could be an attractive takeover target for larger operators given its relatively strong foothold in its circles of operation, if consolidation kicks in the industry; the second trigger could be the additional revenue streams from sharing of owned passive infrastructure with other operators."

ASK Securities has a more negative view of the stock, which it reckons has a fair value of INR29 ($0.71). In its report, the ASK team expresses concern that Spice's balance sheet is weaker than its competitors' and predicts its negative net worth of INR1.34 billion will mean the operator may have to raise additional equity funds by fiscal year 2009.

The firm also expects Spice's two-region operation will lose out to integrated national players such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Reliance Communications Ltd. (RCom) , particularly as competition increases and it remains limited to a smaller battleground.

Like Edelweiss, ASK Securities predicts Spice will be swept up by consolidation: "Given its weak financials and lack of economy of scale, Spice is a clear take-over target. This could change business dynamics, thus a positive. As we understand, Spice had often been in talks with various operators to sell-out in the past, but valuation has been the key reason for talks to fall through."

Spice has most recently been linked with Idea Cellular Ltd. , and reports indicate valuation was again a sticking point. But with the IPO under its belt and a clear valuation for its stock, Spice is likely to see more approaches. (See Spice Mulls Hot Merger IDEA.)

— Nicole Willing, Reporter, Light Reading