Talks are also on with several financial institutions for equity participation in the proposed company. Koshika, part of the Rs 3,000-crore Group Usha, is likely to pick a majority stake in the company, said company officials.

The company, to be set up in a few months, will invest in infrastructure which will enable the company to increase the reach of cellular services in the state, said officials.

Koshika had earlier signed a memorandum of understanding (MoU) with Uptron to set up PCOs/STD booths and cyber dhabas in the state.

Uptron is further likely to enter into marketing tie-ups with bodies in rural areas to spread the service, said officials.

According to Koshika Telecom general manager (sales & marketing) Sundeep Saksena, the company has started a pilot project of providing internet access through GSM technology in five PCOsin the state.

The pilot is on at five villages across the state (Bara near Allahabad, Syana in Bullandsheher district, Ismailganj near Lucknow, Jalalpur near Varanasi and Jansat near Muzaffarnager). Plans are afoot to increase the number of internet-enabled PCOs to 100 within the next three months, he said.Of the 30,000 villages where the GSM cellular service is available, PCO/STD booths have been set up in 2,200 villages in the state, said Saksena. The company has tied up with Indian Institute of Management, Ahmedabad, to help develop local content for internet, he said.

Each internet-enabled PCOs generates on an average employment for at least six people in each village, said Saksena. The entrepreneurial-driven model will make a major impact on socio-economic life of villagers, he said.

Stating an example, Saksena said that according to a survey done by the company on usage of mobile services in villages, farmers in the Bullandsheher district are keen to call up the mandis to know the latest ratesfor their produce. Similarly, housewives in villages are excited by the idea of keeping in touch with their husbands working in cities, said Saksena.

"If the model is successful, it may reverse the trend of villagers moving to cities," he added.

Koshika recently offered mobile cellular phone service in the Delhi-Lahore bus. Mobile services are also being offered in several bus routes in Uttar Pradesh and Punjab.