Govt clears ₹1.64 trillion revival package for BSNL
Premium- Conversion of spectrum dues into equity, capex support of bailout plan
Union government on Wednesday cleared a ₹1.64 trillion revival package for debt-ridden state-owned telecom company Bharat Sanchar Nigam Ltd., (BSNL) and a ₹26,316 crore scheme for extending fourth generation telecom services (4G) to close to 25,000 remaining villages, Communications and Electronics and Information Technology minister Ashwini Vaishnaw said at a briefing.
The scheme of extending 4G connectivity to more villages will be implemented by BSNL. The package for the state--run telecom firm comprises conversion of spectrum dues to equity, capex support, debt restructure with sovereign guarantee backing and viability gap funding for rural wireline operations, Vaishnaw explained.
The BSNL revival move, which also includes its merger with Bharat Broadband Network Limited (BBNL) for better infrastructure utilisation, underscores the government’s policy of retaining one state-run business in strategic sectors. In telecom, the Modi administration’s vision is to make broadband connectivity available to every gram panchayat in the country, for which a state-run company will help to a great extent.
Vaishnaw said that the package has three elements. “The first element is to upgrade the services of BSNL. The second element is to de-stress the balance sheet of BSNL. The third element is to expand the fibre optics network of BSNL to meet the Prime Minister’s vision of bringing broadband connectivity to every household," said the minister. The minister said BSNL’s spectrum requirement will be fully met.
The minister said that after a 2019 revival package, BSNL’s financial stress has come under control and has started making operating profits and the idea of the latest package is to make it a sustainable entity and a vibrant telecom player.
The minister also said that BSNL will be able to expand its 4G services to more than 120,000 sites, an important source of revenue. Market stability and national security are important considerations in having a public sector entity in the telecom sector, the minister said explaining the rationale of the package.
“Telecom is a strategic sector. Presence of BSNL in telecom market acts as a market balancer. BSNL plays a crucial role in expansion of telecom services in rural areas, development of indigenous technology and disaster relief," an official statement said.
As part of the package, BSNL will get spectrum in 900/1800 MHz band administratively at the cost of ₹44,993 crore through equity infusion, capex funding of ₹22,471 crore over next four years and ₹13,789 crore viability gap funding for rural wire-line operation. The company’s authorised capital will be raised from ₹40,000 crore to ₹1,50,000 crore in lieu of adjusted gross revenue (AGR) dues, provision of capex and allotment of spectrum. BSNL will be able to de-stress its balance sheet by refinancing debt with sovereign guarantee backed long term bonds for over ₹40,000 crores, as per an official statement.
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“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 statement said.
The cash component of the package is about ₹43,900 crores and non-cash component of Rs1.2 trillion.
The Union Cabinet had last October approved a plan to combine Mahanagar Telephone Nigam Ltd (MTNL) - which provides services in Mumbai and New Delhi - with BSNL that services the rest of the nation.
That rescue package included infusion of ₹20,140 crore capital for purchase of 4G spectrum, ₹3,674 crore for GST to be paid on spectrum allocation, companies raising ₹15,000 crore in debt on the sovereign guarantee and government funding ₹17,160 crore voluntary retirement scheme (VRS) and another ₹12,768 crore towards retirement liability. The two firms are also allowed to monetise assets worth ₹37,500 crore in the next three years.
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