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With Rs 1.64 trillion, BSNL gets new lease of life: BBNL to be merged with telco

Bailout package bigger than Rs 74,000 crore in 2019

In addition, Bharat Broadband Network (BBNL), the special purpose vehicle which was created to lay a country-wide fibre network called BharatNet, will be merged with BSNL to boost its infrastructure and support telephony services.
In addition, Bharat Broadband Network (BBNL), the special purpose vehicle which was created to lay a country-wide fibre network called BharatNet, will be merged with BSNL to boost its infrastructure and support telephony services.

The government on Wednesday announced a hefty revival package of Rs 1.64 trillion for state-owned telecom service provider Bharat Sanchar Nigam (BSNL). This package for the ailing company is much bigger than the Rs 74,000-crore bailout announced in October 2019.

The fresh package, which was approved by the Union Cabinet, comprises conversion of the company’s dues into equity, financial support and allocation of spectrum to provide 4G services. It may be mentioned that the 2019 package also included Rs 23,814 crore towards allocation of 4G spectrum.

In addition, Bharat Broadband Network (BBNL), the special purpose vehicle which was created to lay a country-wide fibre network called BharatNet, will be merged with BSNL to boost its infrastructure and support telephony services.

“We are committed to strengthening BSNL,” telecom minister Ashwini Vaishnaw said. “The first boost to BSNL came from the 2019 revival package, making it a stable entity. Post that, it made operating profits. With today’s revival package, BSNL will become a viable entity,” he said.

The revival measures focus on fresh capital for upgrading services, allocating spectrum, de-stressing its balance sheet and augmenting its fibre network by BBNL, the telecom minister said, adding that the package has a cash component of Rs 43,964 crore and a non-cash component of Rs 1.2 trillion spread over four years.

However, most of the package will be implemented in the first two years, the minister added.

“Previous package of Rs 74,000 crore in 2019 gave a good lifeline to BSNL. As a direct result, it 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.”

The Cabinet approved the allocation of 900/1800 MHz band spectrum worth `44,993 crore to BSNL so that it can provide 4G services. The allocation has been made because the company did not participate in the ongoing auctions to buy spectrum.

Vaishnaw said that the allocation of spectrum 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 a 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 trillion 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 FY2026-27,” 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 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.

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