Spice Makes Tasty Market Debut

Trading in shares of Indian mobile operator Spice Telecom got off to a strong start this week, reflecting investor interest in the country’s rapidly growing service providers.

The stock began trading on the Bombay Stock Exchange Thursday morning and hit a day’s high of 67.05 rupees (US$1.66), a premium of 45.76 percent on its IPO price of INR46 ($1.14), before closing at INR60.65 ($1.50), up 31.85 percent. Spice shares remained strong on Friday, closing at INR59.15 ($1.47).

Spice’s IPO was oversubscribed 37 times, and in its opening day’s trading the stock attracted investors like Fidelity and Citigroup Global Markets, which picked up 17.25 million shares between them.

The carrier has attracted interest as an expanding regional carrier and an increasingly likely takeover target. (See India's Spice Sets IPO Date.) Spice operates in just two of India’s 23 regions and added 163,306 subscribers in June for a total of 3.17 million customers. While awaiting a response to an application for nationwide licenses, the carrier is focusing on building out capacity on its GSM network and has received permission to offer long distance services.

Shares in operators like Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Reliance Communications Ltd. (RCom) , and Idea Cellular Ltd. , which recently went public, have been in high demand as subscriber growth continues to soar. According to the Cellular Operators Association of India , India's GSM body, GSM-based operators added 5.38 million new subscribers in June alone. CDMA operators, which have yet to release their latest figures, have been adding nearly 2 million customers every month.

That growth was also a driving force behind Vodafone Group plc (NYSE: VOD)'s first-quarter earnings, which were boosted by a 50 percent increase in revenues on a local currency basis from its newly acquired Vodafone Essar unit in India. (See Vodafone Unveils Q1 Interims.)

— Nicole Willing, Reporter, Light Reading

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