Cabinet approves a BSNL revival plan worth Rs 1.64 trillion

The entire rehabilitation package unveiled on Wednesday would include a cash element worth Rs 43,964 crore and a non-cash element worth Rs 1.2 lakh crore that will be spread out over a period of four years.

The Union Cabinet approved a package worth Rs 1.64 lakh crore on Wednesday to revive the government-owned telecom company Bharat Sanchar Nigam Ltd (BSNL). The money will be used towards upgrading the company's network, allocating spectrum so it can provide 4G services, loosen up its balance sheet and expand its fibre network.

the four-year rehabilitation strategy was revealed, following a 2019 boost, when the government offered a Rs 70,000 crore package primarily to finance a voluntary retirement scheme for BSNL employees.

The Department of Telecom(DoT) has also suggested that  Bharat Broadband Nigam Ltd (BBNL) and BSNL merge in order to improve the operator's wireline offering. The key organisation for carrying out the BharatNet initiave is BBNL. The BharatNet-built infrastructure will carry on being a national resource that is open to all telecom service providers without restriction.

“The 2019 relief package gave BSNL a lifeline. Before that, it was making operational losses, which wasn’t sustainable. The package helped BSNL in becoming operational profitable. With the latest relief package, we expect BSNL to become net profitable in the next three-four years,” Minister of Communications Ashwani Vaishnaw informed in a media statement.

The entire rehabilitation package unveiled on Wednesday would include a cash element worth Rs 43,964 crore and a non-cash element worth Rs 1.2 lakh crore that will be spread out over a period of four years. The spectrum that BSNL requires to provide 4G services will be administratively allocated by the centre. Through equity injection, spectrum in the 900/1,800 MHz band will be allocated for Rs 44,993 crore.

Vaishnaw further informed that the Centre will pay capital expenditure (capex) of Rs 22,471 crore for creating the 4G technology stack, while giving Rs 13,789 crore to BSNL as viability gap support for economically unvialble rural wireline activities carried out between Fiscal Year 2015 and Fiscal Year 2020.

Statutory obligations worth Rs 33,404 crore will be transformed into equity in order to relieve balance sheet stress. Additionally, the Centre will offer an autonomous guarantee for generating funds to pay off existing loans.