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Cabinet approves Rs 1.64 lakh crore revival package for BSNL

The package will have three main elements - improving the quality of BSNL services, de-stressing the balance sheet, and expanding the fiber reach through merger with Bharat Broadband Network Limited (BBNL).

July 28, 2022 / 06:36 AM IST

The Union Cabinet has approved a Rs 1.64-lakh crore revival package for the government-owned Bharat Sanchar Nigam Limited (BSNL), said Ashwini Vaishnaw, the minister for telecom, on July 27.

The package will have three main elements - it will aim at improving the quality of BSNL services, will be used to de-stress the balance sheet, and will expand the company's fiber reach by merging Bharat Broadband Network Limited (BBNL) with it.

The package will include a cash support of Rs 43,964 crore and non-cash support of Rs 1.20 lakh crore, Vaishnaw said. The revival programme is for a four-year period, but most of it will be implemented in the first two years, he added.

The cash proponent will be used for spectrum allocation, capital expenditure and viability gap funding, the minister noted.

"To improve existing services and provide 4G services, BSNL will be allotted Spectrum in 900/1800 MHz band administratively at the cost of Rs 44,993 crore through equity infusion. With this spectrum, BSNL will be able to compete in the market and provide high speed data using their vast network including in rural areas," an official release stated.

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BSNL is also in the process of deploying "Atmanirbhar 4G" technology stack, the government said. "To meet the projected capital expenditure for next 4 years, the government will fund capex of Rs 22,471 crore. This will be a significant boost to development and deployment of Atmanirbhar 4G stack," it added.

The government will also provide Rs 13,789 crore to BSNL as viability gap funding for commercially unviable rural wire-line operations done during 2014-15 to 2019-20.

"The authorized capital of BSNL will be increased from Rs 40,000 crore to Rs 1,50,000 crore in lieu of AGR dues, provision of capex and allotment of spectrum," the release added.

To de-stress the balance sheet, the government is approving a sovereign guarantee bond issuance for BSNL to repay the bank loans, Vaishnaw said. The state-run telecom service provider has around Rs 33,000 crore as bank debt.

"AGR dues of BSNL amounting to Rs 33,404 crore will be settled by conversion into equity. Government will provide funds to BSNL for settling the AGR/GST dues," the official release noted, further adding that "BSNL will re-issue preference share of Rs 7,500 crore to the government".

There is an element of sovereign guarantee bonds for Mahanagar Telephone Nigam Limited (MTNL), a subsidiary of BSNL, also in the package, Vaishnaw said.

The merger of BBNL, the government-owned broadband infrastructure provider, will facilitate wider utilisation infrastructure laid under BharatNet.

The BSNL-BBNL's combined fiber network will be of around 14 lakh km, Vaishnaw said, adding that high speed optical fiber services are likely to get a boost across India, including in remote areas, after the merger comes into effect.

Post the implementation of the revival package, BSNL will be able to expand 4G services to raise ARPU (average revenue per user) to Rs 170-180, the minister said.

The administrative allocation of spectrum for 4G and 5G services for BSNL has also been approved by the Cabinet, he added.

The rollout of BSNL 4G services is expected "in about 2 years", and will significantly increase the revenue, Vaishnaw said.

As on May 31, 2022, the private telecom service providers held 89.87 percent market share of the wireless subscribers, whereas BSNL and MTNL, the two PSU access service providers, had a market share of only 10.13 percent, as per a release issued by the Telecom Regulatory Authority of India on July 19.

The Rs 1.64 lakh crore-revival plan, apart from rejuvenating BSNL, is also expected to create significant amount of employment. The government "expects 1 lakh employment to be generated", Vaishnaw said.

"We will hold BSNL to very clearly defined outcomes, clearly defined goals…what we are infusing here is taxpayers’ money," he added.

It is expected that with the implementation of the revival plan, BSNL will turn-around and "earn profit in FY 2026-27", the official release noted.
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first published: Jul 27, 2022 04:38 pm
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