The story of Hutch, of course, is almost telecom folklore. But few would remember that the country's third largest phone company was approached by a clutch of investors, including PE firms Blackstone and Texas Pacific, prior to being acquired by Vodafone.

    So what else is driving such attention to Indian telecom markets? To some extent, it is lower returns in developed markets, according to SmartCube.

    A combination of surging consumer demand, a rapidly growing services sector, clear laws, a robust financial system and booming stock markets have made India one of the most sought-after destinations for capital, attracting nearly a fourth of the $28 billion that Asia (minus Japan) has received so far in 2007.

    And PE firms that have been seeing returns from investments in developed markets dwindle, are obviously betting on emerging economies like India for big returns.

    Some of the best-known firms such as Lehman Brothers, Baird Private Equity, Apax Partners and Soros Fund Management have been quite active in India in recent months.

    India is currently the third largest telecom market after China and the US, with total number of telephone subscribers at over 225 million as of June 2007. The month saw the highest ever wireless user addition of 7.34 million taking place.

    The most important baro meter of telecom penetration among population – the tele-density – has touched 20 per cent, according to the latest data released by Telecom Regulatory Authority of India (TRAI).

    Though that is still far behind USA which has a tele-density of 60 per cent and China which has a tele-density of 23 per cent, the cellular subscriber base in India is expected to quadruple by 2012.

    Investors believe that given the low penetration levels, mobile telecom (now accounting for as much as 75 per cent of the total subscriber base) will be the major growth driver, with its ability to continually address larger proportions of the population.