Before the IPO, the equity base of the company is being expanded by 20 per cent through fresh capital infusion by the promoters.

Escotel Mobile, a joint venture of Escorts and First Pacific Company of Hong Kong, proposes to invest about Rs 600 crore over a period of two to three years.

Escotel's executive director and chief executive officer Manoj Kohli, when contacted, said, "The company's board is meeting tomorrow to take a final decision on the time and quantum of the equity expansion".

Sources said the company is close to acquiring two circles and the acquisition of a third circle too. The company plans to acquire one A category and two B category circles in the next two years.

The company is also in talks with ICICI for a loan of Rs 600 crore to part-finance the acquisitions. The company, which has a total subscriber base of 1.6 lakh at present, is planning to reach a capacity of a million subscribers in three years. Of this, 700,000 will be of the pre-paid kind. The company hopes to achieve a cash break-even later this year with a subscriber base of 2.5 lakh, he added. Its break-even will be achieved next year at the level of 3.3 lakh subscribers.

In June, its subscriber base will touch 1.7 lakh from 1.6 lakh at present. The company has an equity of Rs 310 crore at present. Escotel provides services to 1.6 lakh customers in 90 cities, supported by four mobile switching centre/remote switching module.

Escorts Ltd holds 51 per cent equity stake in Escotel Mobile Communications and the balance is held by First Pacific, the pioneers of digital cellular technology in Hong Kong. Escotel operates cellular phone services in Uttar Pradesh (west), Haryana and Kerala circles.

It was the first cellular company to achieve financial closure for its cell projects. It has already invested more than Rs 800 crore in the network, people and infrastructure.

In September 1998, Escotel introduced its prepaid service under the brand name of V-Tel in UP (west), followed by the launch of V-Tel in Haryana in February 1999 and in Kerala in May 1999. Since the launch, pre-paid sales account for over 40 per cent of new sales.