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* Vodafone to pick six banks to manage India IPO - sources
* Vodafone's Indian unit valued at about $20 bln - analysts
* Vodafone India's second-largest mobile phone operator (Adds Vodafone's India tax row, industry context)
By Sumeet Chatterjee and Denny Thomas
HONG KONG, April 21 (Reuters) - Vodafone Group hasset the ball rolling for the long-awaited initial public offerof shares in its Indian subsidiary by inviting banks, includingCitigroup, Goldman Sachs and Morgan Stanley,to make pitches to manage it, people with direct knowledge ofthe deal said.
The offer of shares in Vodafone India is expected to raisebetween $2 billion and $2.5 billion, the people said, making itthe biggest IPO in India since state-owned Coal India Ltd's $3.5 billion listing in 2010.
Vodafone Group, which is India's second-largest mobileoperator behind Bharti Airtel, had raised the prospectof a listing in India as early as 2011.
Other banks approached by Vodafone included Bank of AmericaMerrill Lynch, UBS Group as well as Indianbanks ICICI Securities and Kotak Investment Banking, the peopleadded.
The investment banks have been asked to make their pitchesnext week to win underwriting mandates for the share sale, thepeople familiar with the matter said.
The company is expected to pick about half a dozen banks tomanage the offering in the next two weeks, these people added.Vodafone India is likely to be valued at about $20 billion underthe offer, according to analysts' estimates.
The deal offers an unusually lucrative opportunity forinternational banks in a market where the fees earned onunderwriting share sales are amongst the lowest in the world andequity raisings worth more than $1 billion are rare.
Fees paid to banks, both foreign and domestic, forunderwriting share sales last year totalled $19.6 million from134 offerings, up from $10.3 million in 2014, according toThomson Reuters data.
Vodafone said in November it had started preparations forfloating its Indian subsidiary.
"We have previously said that we have started preparationsfor a potential IPO, which includes private conversations withbanks, but this is a lengthy process and no decision will bemade until we are at the end of it," the parent company said onThursday in a statement issued in London.
Bank of America Merrill Lynch, Goldman and UBS declined tocomment. Citigroup, Morgan Stanley and the Indian banks did notrespond to requests for comment.
INDIA EXPANSION
Vodafone, one of the largest corporate investors in Asia'sthird-largest economy, is expected to use the proceeds to buyadditional radio spectrum and further expand its operationsacross India's crowded and cut-throat market.
Indian mobile phone operators have been spending heavily insetting up fourth-generation (4G) mobile broadband data networksto meet the expected demand.
Vodafone entered India in 2007, when it acquired a majoritystake in Hutchison Essar and since 2014 has wholly owned Vodafone India, which operates in a market that has over abillion mobile subscribers - the second-biggest market in theworld behind China.
The company's market share in India has increased from 15.6percent in 2007 to 18.4 percent in the latest reported July-Sept2015 quarter, according to Indian telecoms regulator TRAI. Ithas about 188.3 million mobile subscribers.
Vodafone is pushing ahead with its IPO plans even though a$2-billion tax dispute dating back to its acquisition ofHutchison Essar remains unresolved.
The preparation for the IPO also comes as Reliance Jio, abusiness controlled by India's richest man, Mukesh Ambani, isgearing up to disrupt the market with the launch of thecountry's biggest 4G network. (Additional reporting by S. Anuradha of IFR, Himank Sharma inMumbai and Paul Sandle in London; Editing by Lisa Jucca and GregMahlich)
