NEW DELHI: The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved a Rs 1.64 lakh crore package for state-owned Bharat Sanchar Nigam Limited (BSNL), in a bid to turn around the loss-making telecom operator.
The money will be used to de-stress BSNL’s balance sheet, expand fibre reach, and improve service quality, telecom minister Ashwini Vaishnaw told reporters after the meeting.
The Cabinet also cleared the proposal to merge Bharat Broadband Network Ltd (BBNL) with BSNL to facilitate wider utilisation of infrastructure.
“This revival package is for four years and the main work will be done in the next two years,” Vaishnaw said, adding that BSNL will turn profitable within four years.
The government will allot 900/1800 MHz band spectrum worth Rs 44,993 crore to BSNL through equity infusion. This will help BSNL expand its 4G services.
The minister said BSNL is in the process of deploying Atmanirbhar Bharat’s 4G technology stack.
The government will help the telco meet its projected capital expenditure for the next four years and fund capex of Rs 22,471 crore.
Another Rs 13,789 crore will be provided as viability gap funding for rural wireline operations done between 2014-15 and 2019-20.
The authorised capital of BSNL will be increased from Rs 40,000 crore to Rs 1.5 lakh crore in lieu of adjusted gross revenue (AGR) dues, provision of CAPEX and allotment of spectrum.
To de-stress BSNL’s balance sheet, the government will provide a sovereign guarantee for the telco to raise long-term loans. Subsequently, BSNL will be able to raise long-term bonds for Rs 40,399 crore.
BSNL’s AGR dues of Rs 33,404 crore will also be settled by conversion into equity. BSNL had suffered Rs 50,631 crore losses in the past five years.
It posted Rs 7,441 crore loss in 2020- 21 and Rs 15,500 crore in 2019-20.
The government had infused Rs 70,000 crore in BSNL in 2019. Following this, the telco turned Ebitda positive (operating profit) in 2020-21.
The revival measures focus on fresh capital for upgrading services, allocating spectrum, de-stressing its balance sheet and augmenting its fibre network by BBNL with BSNL, he said, adding the package has a cash component of Rs 43,964 crore and a non-cash component of Rs 1.2 lakh crore spread over four years.
"Previous package of Rs 74,000 crore in 2019 gave a good lifeline to BSNL. As a direct result, that began generating operating profit (Rs 1,000 crore). Now to make it a viable company, the financial restructuring has to be done," he said.
"Today's decision will help make BSNL sustainable."
With BSNL rapidly losing market share to private rivals, the state firm would have gone into a deep sink if government support was not provided to upgrade technology and services to match the competition.
The Union Cabinet headed by Prime Minister approved an allocation of 900/1800 MHz band spectrum worth Rs 44,993 crore to support 4G services to BSNL, which has skipped participation in recent auctions of airwaves.
This allocation, he said, will allow BSNL to compete in the market and provide high-speed data.
For technology upgrades, the government will fund a capex of Rs 22,471 crore over the next four years to "boost development and deployment of indigenous Fourth Generation or 4G stack," Vaishnaw said.
Also, the government will provide Rs 13,789 crore to BSNL as viability gap funding for commercially unviable rural wireline operations done during 2014-15 to 2019-20.
To de-stress its balance sheet, Rs 33,404 crore of statutory dues will be converted into equity and the government will give a sovereign guarantee to the company to raise long-term bonds of Rs 40,399 crore to repay its current high-cost debt.
Also, BSNL will re-issue a preference share of Rs 7,500 crore to the government.
The authorised capital of BSNL will be increased from Rs 40,000 crore to Rs 1.5 lakh crore in lieu of dues, provision of capex and allotment of spectrum.
"With these measures, BSNL will be able to improve the quality of existing services, roll out 4G services and become financially viable. It is expected that with the implementation of this revival plan, BSNL will turn around and earn profit in FY 2026-27," the minister said.
The Union Cabinet also approved a project for saturation of 4G mobile services in uncovered villages across the country at a total cost of Rs 26,316 crore.
The project will provide 4G mobile services in 24,680 uncovered villages in remote and difficult areas, he said.
The minister said BSNL's 8.6 lakh km optical fibre will be extended by merging BBNL (which has the BharatNet project under it and an optical fibre network of 5.8 lakh km).
With this, BSNL will have 14 lakh km of optical network.
"The revival package will enable BSNL to improve services and generate a net profit in 3-4 years. Its 5G services launch will happen in next 1.5-2 years," Vaishnaw said.
"In 1-1.5 years its 4G telecom services will reach people."
On the merger of MTNL and BSNL, he said the plan is still there but "it needs complex financial restructuring".
"More work is left so it will take it step-by-step," he said.
(With PTI Inputs)