Virgin Mobile India, a brand under Tata Teleservices, on Thursday launched GSM services in Mumbai and Maharashtra to tap the growing pre-paid youth subscribers with an initial investment of Rs 500 crore, a top official said.

“We are initially investing Rs 500 crore till September 2010 to develop our sales and services distribution network, customer care and brand building,” MA Madhusudan, chief executive officer, Virgin Mobile India, said.

Last month, it entered the Karnataka, Andhra Pradesh, Chennai, Tamil Nadu, Kerala and Orissa markets.

“The company’s pan-India service rollout will be completed by the end of this financial year,” Madhusudan said. The firm has a revenue sharing model with Tata Teleservices operating in 22 telecom circles with a base of 60 million subscribers, he added.

The firm is targeting the growing youth subscribers in urban India. “Out of the 520 million mobile subscriber market in the country, 50 per cent are youth, out of which 75 per cent of are city-based,” Madhusudan said.

He said he was targeting the pre-paid youth market, which at present was 96 per cent and post-paid only 4 per cent. “We are the first one in the country to offer guaranteed pre-paid bills to our subscribers and we expect many pre-paid customers to switch over to us,” Madhusudan said. The company is targeting 10 per cent market share in the urban youth segment in the next three years.

The customers are offered a 20 paise per minute for STD and local calls from Virgin to Virgin call, local calls at 40 paise per minute from Virgin to any other network and 50 paise per minute for STD calls without any packs.

The SMS packs priced at Rs 33 and Rs 69 provide 2,000 local and national SMSs free for 30 days and 500 local and national SMSs free daily with a validity of 30 days respectively.

“Our service brand is designed for the youth to experience world class networking,” Madhusudan said.

It has introduced value added services like Friend circle, vBelong, vGenie, Wow, and vJingle with music, infotainment and social networking as the main focus.