Government to Revive BSNL; Plans to Pump funds Valuing Over INR 1.64 Trillion

The government announced a massive INR 1.64 trillion revitalization package for state-owned telecom service provider Bharat Sanchar Nigam on Wednesday (BSNL). This bailout amount for the struggling corporation is far larger than the INR 74,000-Cr.  bailout announced in October 2019.

The new package, authorised by the Union Cabinet, includes the conversion of the company's debts into equity, financial assistance, and spectrum allocation to deliver 4G services. It should be noted that the 2019 package contains INR 23,814 Cr for the allocation of 4G spectrum.

Furthermore, Bharat Broadband Network (BBNL), a special purpose vehicle formed to lay a countrywide fibre network known as BharatNet, will be combined with BSNL to strengthen its infrastructure and enhance telephone services.

Telecom Minister, Ashwini Vaishnaw said, “We are committed to strengthening BSNL.” He further mentioned that the first boost to BSNL came from the 2019 revival package, which made it a stable entity. Post that, it made operating profits. With today’s revival package, BSNL will become a viable entity.

The revival measures by BBNL focus on new capital for upgrading services, allocating spectrum, de-stressing its balance sheet, and expanding its fibre network, according to the telecom minister, who added that the package has a cash component of INR 43,964 Cr and a non-cash component of Rs 1.2 trillion spread over four years. The majority of the package, however, will be implemented within the first two years.

“Previous package of Rs 74,000 Cr.  in 2019 gave a good lifeline to BSNL. As a direct result, it began generating operating profit (Rs 1,000 Cr. ). Now, to make it a viable company, the financial restructuring has to be done,” he said.

The Cabinet approved the allocation of 900/1800 MHz band spectrum to BSNL in the amount of Rs 44,993 Cr so that it can deliver 4G services. The allotment was made since the corporation did not participate in the ongoing spectrum auctions.

According to Vaishnaw, the spectrum award will allow BSNL to compete in the market and supply high-speed data. The government would invest INR 22,471 Cr in technology upgrades over the next four years to accelerate the development and deployment of indigenous fourth generation or 4G stacks.

The government will grant INR 13,789 crore to BSNL as viability gap assistance for economically unviable rural wireline operations carried out between 2014-15 and 2019-20. To de-stress its balance sheet, INR 33,404 Cr of statutory dues would be converted into equity, and the government will provide a sovereign guarantee for the company to raise Rs 40,399 Cr in long-term bonds to repay its present high-cost debt.

In addition, BSNL would reissue to the government a preference share worth INR 7,500 Cr. In lieu of dues, provision of capex, and spectrum allotment, BSNL's authorised capital will be enhanced from INR 40,000 Cr to INR 1.5 trillion.

“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 FY2026-27,” the minister said.

The Union Cabinet has authorised a project worth INR 26,316 Cr. for the saturation of 4G mobile services in underserved communities across the country. The initiative would bring 4G mobile services to 24,680 unconnected villages in tough and inaccessible places.

“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 that 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.