NEW DELHI, Nov 2: Essar Commvision Ltd (ECL) said it was close to selling a stake to GTE Corp of the United States.

"We are close to signing an agreement with GTE for a 10 per cent stake in Essar Commvision. GTE has expressed its interest," Essar Telecom Ltd's chief executive officer Pramod Saxena, a stakeholder in ECL, told Reuters on Sunday. He said ECL had already closed a consultancy deal with GTE, which would lead to an operations and maintenance agreement within a month for its network in the northern state of Punjab.

Saxena said there was a possibility that GTE and ECL might agree on a 15 per cent stake for the US firm. He said ECL's equity capital would climb to $400 million in the first three years of operations, and GTE would buy a stake at par value.

ECL is a consortium in which Essar Telecom holds 31 per cent equity, Essar International 10 per cent, Essar Steel Ltd 10 per cent, Bell Atlantic Corp 10 per cent and Mauritius-based Asia Pacific Infrastructure Ltd 39 percent.

It was shortlisted to operate fixed phone services in Punjabfor 15 years in early-1996, after India auctioned licences to private companies.

ECL is expected to sign a licence agreement with the Department of Telecommunications (DOT) on Tuesday, and pay Rs 1.32 billion ($36.5 million) as the first year's licence fees.

Saxena said ECL planned to invest $1.1 billion during the next three years to roll out its phone services in Punjab.

"We will install at least 500,000 lines in three years, and may go up to 700,000," he said.

ECL's competitor, DOT, has 680,000 phone lines in Punjab.

In June ECL signed a deal worth $5 million with Motorola for the installation of 2,000 cable telephony lines in India.

The deal has the potential to involve 200,000 homes eventually, an ECL official had said when announcing the agreement, with each line worth around $1,000.

Saxena said the project would have a debt equity ratio of1:1.2, and the Industrial Finance Corporation of India would arrange the debt.

"We have received government approval for external commercial borrowings of $530 million. Lead financial institution Industrial Finance Corporation of India will place debt for ECL to the tune of $520 million," Saxena added.