The government is also approving sovereign guarantee bond issuance for the cash-crunched BSNL to repay its bank loans
New Delhi: The Union Cabinet on Wednesday approved a 1.64 lakh crores revival package for the merger of Bharat Broadband Network Limited (BBNL) into the state-owned telecom operator Bharat Sanchar Nigam Limited (BSNL). The move by the government aims at not only improving the quality of BSNL services and de-stressing the balance sheet, but also to expand the fibre reach of the company.
The government is also approving sovereign guarantee bond issuance for the cash-crunched BSNL to repay its bank loans as the state-run telecom service provider is saddled with a hefty bank debt worth ~33,000 crores. However, the government wants to convert such huge statutory dues into equity to help improve BSNL’s financial health and to see a turnaround of the company by FY’27.
Briefing the media after the Cabinet meeting, telecom minister Ashwini Vaishnaw said, "The Union Cabinet today approved a Rs 1.64 lakh crores package for the revival of state-owned telecom firm BSNL where the package has a cash component of Rs 43,964 crores and a non-cash component of Rs 1.2 lakh crores spread over four years. The package has three elements -- to improve services, de-stress the balance sheet and expansion of fibre network of the company."
The government, Mr Vaishnaw said, is also approving sovereign guarantee bond issuance for BSNL to repay bank loans. "The state-run telecom service provider has Rs 33,000 crores as bank debt. Post package, BSNL will be able to expand 4G services to raise ARPU to Rs 170-180. Besides, the administrative allocation of spectrum for 4G and 5G services for BSNL has also been approved by the Cabinet," he added.
The minister further said, "The combined fibre network of BSNL and BBNL will be of around 14 lakh km and the government expects high-speed optical fibre services to get a boost across India, including in remote areas, after the BSNL-BBNL merger. The rollout of BSNL 4G services is expected in about 2 years and will significantly increase the revenue."
In a statement, the government also said that 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 turnaround and earn a profit in FY 2026-27," it added.
According to a Telecom Regulatory Authority of India statement issued on July 19, private access service providers had an 89.87 percent market share of wireless subscribers as of May 31, while BSNL and MTNL, the two PSU access service providers, had a market share of only 10.13 percent.