India's Idea Cellular starts services in Mumbai

MUMBAI, Aug 20 (Reuters) - Idea Cellular (IDEA.BO: Quote, Profile, Research, Stock Buzz), India's fifth-largest mobile operator, on Wednesday launched services in Mumbai, with aims of getting 20 percent of the city's new users over the next year and breaking even in the zone in four years.

India's financial capital has been a lucrative zone for telecom firms, but with more than 80 percent of the city's population owning mobile phones, compared with an all-India average of just 26 percent, the pace of addition has slowed down.

Mobile subscriber numbers in the Mumbai service area rose by about 4 million in the year ending June to 14.5 million, with the population of the telecom zone estimated at about 17 million.

In Mumbai, Vodafone Essar, India's No. 3 mobile firm, had a market-leading 3.7 million users as of end-June, followed by Reliance Communications, the second-largest operator nationally, with just over 3 million.

Managing director Sanjeev Aga said Idea would spend 8 billion rupees ($180 million) on its Mumbai expansion in the financial year ending April 2009.

Shares in Idea Cellular were up 3.7 percent at 84.90 rupees at 0856 GMT in a Mumbai market that was up 1.2 percent.

Idea already provides mobile services in 11 of India's 22 telecoms service areas and has licences for the others. It had 28.2 million subscribers as of end-July.

Nationally, Idea lags Bharti Airtel (BRTI.BO: Quote, Profile, Research, Stock Buzz), Reliance Communications (RLCM.BO: Quote, Profile, Research, Stock Buzz), Vodafone-controlled Vodafone Essar (VOD.L: Quote, Profile, Research, Stock Buzz) and state-run Bharat Sanchar Nigam Ltd in number of subscribers.

The company has agreed to buy smaller operator Spice Communications (SPCM.BO: Quote, Profile, Research, Stock Buzz), which operates in Punjab and Karnataka service areas. Malaysia's TM International (TMIT.KL: Quote, Profile, Research, Stock Buzz) will take a stake of about 20 percent in Idea as part of the deal. (Reporting by Narayanan Somasundaram and Devidutta Tripathy; Editing by John Mair)