AT&T has revealed its ambitions to provide mobile phone services in India as companies scrambled to win a share of the world’s fastest-growing market.

The biggest US network provider partnered with Mahindra Telecommunications to apply for licences in all 22 zones that divide the Indian market.

It will own 74 per cent of the joint venture in keeping with foreign investment limits.

“AT&T wants to enter the business in India ... obviously it sees a big opportunity,” Ulhas Yargop, the president of information technology at Mahindra & Mahindra, the parent company, said.

AT&T already holds licences for national long-distance and international calls in India with Mahindra.

It was the first foreign carrier to enter the country and began providing commercial services in April.

Its interest in the mobile phone sector is driven by huge growth opportunities in India where market penetration is still low relative to the 1.1 billion population, particularly in the rural areas.

India is adding more than eight million customers every month, compared to about five million in China, which has more than 500 million subscribers.

Analysts predict that India will reach the 500 million mark by 2010 from a base of more than 230 million today.

AT&T, which has 63.7 million subscribers in the US, is following in the footsteps of Vodafone, the world’s largest mobile phone group, which bought a controlling stake in Hutchison Essar this year for $11.1 billion.

Vodafone will spend nearly $2 billion over the next few years expanding the fourth-largest network in India in an effort to knock Bharti Airtel off the No 1 spot.

The Indian network provider passed the 50 million subscriber mark last month and is targeting 100 million by 2010.

AT&T’s move came on the last day for new licence applications set by the Government.

The auction has attracted companies from outside the telecoms sector, including the property and retail companies DLF, Indiabulls, Unitech, Jaypee Group and Parsvnath Developers.

More than 200 applications were received in the final days before the deadline.

Some analysts said that these companies might be considering offering mobile phone services direct to the thousands of people working and living in their sprawling office and residential complexes across India.

Others speculated that non-telecoms groups might want to hoard scarce spectrum with a view to selling off a mobile licence at a premium later.

The Government has said that it will stop accepting licence applications after this latest batch until more spectrum is made available by the defence industry.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange